A Conservation Guide for Landowners

A CONSERVATION GUIDE FOR LANDOWNERS

BIRDS FARM LAND

STEWARDSHIP WATER

LAND ACKNOWLEDGMENT

The work of Willistown Conservation Trust takes place on the ancestral lands of the Lenni Lenape. We honor the Lenape and other Indigenous caretakers of these lands and waters, the elders who lived here before, the Indigenous today, and the generations to come. We acknowledge the Lenni Lenape as the original people of this land and their continuing relationship with their territory. In our acknowledgment of the presence of Lenape people in their homeland, we affirm the aspiration of the great Lenape Chief Tamanend, that there be harmony between the Indigenous people of this land and the descendants of the immigrants to this land, “as long as the rivers and creeks flow, and the sun, moon, and stars shine.” As we enjoy and protect the beauty of Willistown and surrounding areas, we cannot forget its original inhabitants and how their way of life echoes throughout the conservation of this land and its natural resources. While we preserve the land we must also preserve its history and the history of the Indigenous people. By sharing their story with the community, and working with local Native American organizations including the Lenape Nation of Pennsylvania, we can hope to ensure that their legacy lives on with the land.

The mission of Willistown Conservation Trust is to preserve and manage the open land, rural character, scenic, recreational, historic, agricultural, and natural resources of the Willistown area and nearby communities, and to share these unique resources with people of all ages and backgrounds to inspire, educate, and develop a lifelong commitment to the land and the natural world.

PHOTO BY JENNIFER MATHES

Over the years, we have watched southeastern Pennsylvania develop exponentially, to the detriment of the nature we all love and need. Willistown Conservation Trust has heeded the call to save, study, and share land, water, and habitat — work that is only made possible thanks to the dedication of landowners, neighbors, and private citizens just like you.

Since the 1980’s, the Willistown community has united in the name of conservation. A movement was started by Bonnie Van Alen and the many landowners who donated their land under conservation easement to save it from encroaching development. It is thanks to their foresight to permanently protect their land that we are able to hike though protected woodlands, ride on horseback over permanently protected trails, and find reprieve in wild and natural spaces. We continue to expand our work into surrounding communities as we seek to promote the value of open space.

Founded in 1996 to uphold this conservation movement, Willistown Conservation Trust is devoted to the continual protection of 28,000 acres within Chester and Delaware Counties. Our organization has helped save over 7,500 acres from development, but there are many more species, ecosystems, and future nature preserves still in need of our protection.

As Executive Director of Willistown Conservation Trust, it is my goal to help you protect your land with the very best Land Protection team we can offer. We have found the conservation easement to be an incredibly successful tool that ensures permanent protection of your land, offers flexibility to you, and gives us all the assurance that your land and legacy will remain safeguarded and upheld well into the future.

Willistown Conservation Trust is an accredited land trust, and we have the skill and experience to manage complex land conservation issues. As a lifelong resident of this area, and as your neighbor, community member, and fellow conservation easement donor, I can personally attest for the importance of contributing your property to open space. When we protect our land, we create a network of connected parcels that provide important habitat for our deteriorating numbers of bird species, increase the health of our streams, and offer nature to our children and their children to continue exploring. We make an impact, one that lasts forever.

I hope you will consider joining the conservation movement by donating a conservation easement.

610.353.2562, EXT. 100

EASEMENTS 101: A FLEXIBLE TOOL FOR PROTECTING LAND

What is a Conservation Easement?

A conservation easement is a flexible tool that protects land while leaving it in private ownership. It is a legal and binding agreement between a landowner and a qualified conservation organization such as Willistown Conservation Trust. The easement is recorded with the deed to the property, applies to all future owners, and exists in perpetuity.

As holder of the easement, Willistown Conservation Trust agrees to see that the restrictions detailed in the easement are upheld in perpetuity.

The landowner retains title to the property and continues to have all rights and obligations of ownership except for those rights specifically restricted under the terms of the easement. The retained rights include the right to sell, lease, bequeath, and subdivide the property subject to the terms of the easement.

What are the Typical Restrictions?

Under the terms of the conservation easement agreement, the landowner agrees to restrict certain future uses of the property. Each easement is unique and tailored to the specific property and the needs of the landowner. Typical restrictions are designed to:

• Protect the special natural, historic, and scenic features of the property such as woodlands, wetlands, streams, open fields, steep slopes, historic buildings, and scenic views.

• Limit the future development of the property. Future residential sites may be designated depending upon the size of the property and its special features and the needs of the landowner.

• Prevent harmful activities such as commercial and industrial uses, quarrying and excavation, and the dumping of solid or liquid waste.

Does The Easement Permit Public Access?

The conservation easement does not necessarily permit public access to the property unless it is the specific desire of the landowner to include an accessible area or a trail easement corridor as part of the easement. Many landowners who have donated conservation easements have included trail easement corridors, resulting in a wonderful network of preserved walking and riding trails throughout the countryside. The inclusion of a trail easement corridor often enhances the deductibility of the easement donation by helping to meet the IRS “public benefits” test.

CONSERVATION EASEMENT DONORS

“It’s with gratitude to those who before us who had the foresight to preserve the surrounding acres that we are now able to fill in the donut hole of the magnificent collection of adjoining properties to create a 250 acre area under the stewardship of Willistown Conservation Trust.”

— LEANNE & ROB MCMENAMIN

PHOTO BY JENNIFER MATHES

CONSERVATION EASEMENT DONORS

remaining open

and teaching

“Preserving the

space

our young to foster relationships with nature are our goals. Nature is full of little souls that deserve kindness and gratitude like the rest of the world.”

— KIM & RUSS GALLIGHER

How Do Conservation Easements Benefit The Community?

Conservation easements serve to protect important natural and scenic assets — its water resources, wildlife habitats, agricultural lands, open space, historic structures, trails, and scenic views — without the need for appropriating public funds. Lands under conservation easement remain in private ownership and do not require public funds for support or maintenance.

Because conservation easements are granted in perpetuity, the community can depend upon eased lands as permanently protected open spaces — a lasting result not possible through zoning or other land use regulations.

How Do Conservation Easements Benefit The Landowner?

Landowners who donate conservation easements derive immense satisfaction from knowing that the scenic and natural resources of the land that they have lived on and cared for will be protected for the use and enjoyment of future generations. Conservation easements often provide families with the opportunity to plan together for the future use of the land, thereby avoiding possible conflict and misunderstanding at a later time.

Neighboring landowners who donate conservation easements on contiguous properties can provide mutual protection against unplanned development, and share the benefits of protecting larger resource areas such as watersheds, woodlands, and scenic landscapes.

Landowners who donate conservation easements generally are eligible for significant financial benefits through the reduction of federal income, gift, and estate taxes. Conservation easements give landowners peace of mind, knowing that their commitment to protecting their land will forever remain an enduring legacy for their family and the community.

PHOTO BY JENNIFER MATHES

“Our privately owned land and the ecosystems upon it are essential to everyone’s well-being, not just our own. Abusing land anywhere has negative ramifications

for people everywhere.”

— DOUGLAS W. TALLAMY, AUTHOR, WILDLIFE ECOLOGIST, & HOMEGROWN NATIONAL PARK FOUNDER

FEDERAL INCOME TAX BENEFITS

In l969 Congress enacted legislation that permits a landowner to take a charitable deduction for the donation value of a qualified conservation easement. Internal Revenue Service regulations issued in l986 better defined the guidelines, including certain “conservation purposes” that must be met for an easement to qualify as a tax deductible charitable donation (Reg. Sec. 1.170A-14). There are no Pennsylvania state income tax benefits associated with the donation of conservation easements.

Passing the “Conservation Purposes” Test

The value of an easement may be deductible for federal income tax purposes if the easement is donated to a qualified organization, such as Willistown Conservation Trust, and meets at least one of the following “conservation purposes.”

Conservation Purposes

1. The preservation of land areas for recreation by, or the education of, the general public.

2. The protection of a relatively natural habitat of fish, wildlife, or plants, and similar ecosystems.

3. The preservation of open space, including woodland and farmland, for either the scenic enjoyment of the general public or when such preservation is pursuant to a clearly delineated governmental conservation policy. In either case, a significant public benefit must result from the preservation of such open space.

4. The preservation of an historically important land area or certified historic structure. Conservation easements held by Willistown Conservation Trust have been drafted to address most or all of the Conservation Purposes defined by the Internal Revenue Service. The rolling hills, lush stream valleys, and historic architecture and landscapes of our countryside are well-suited for preservation with conservation easements.

In addition to meeting at least one of the four conservation purposes, the IRS requires that an easement must be granted in perpetuity and given to a qualified recipient organization such as WCT. The qualified organization must (1) hold the easement solely for the stated conservation purposes; and (2) be able to enforce the easement and be prepared to take legal action, if necessary, to uphold its terms.

PHOTO BY BLAKE GOLL

Value of the Donation

The value of the donation is determined by a qualified conservation appraisal and is generally equal to the difference between the fair market value of the property before and after the donation of the easement. The difference between the “before value” and the “after value,” less any ancillary benefit to the donor, is the amount that can be considered as a charitable donation for income tax purposes.

Assume, for example, that the owners of an unrestricted property worth $1,000,000 place a conservation easement on the land precluding future residential development and protecting the environmental features for the benefit of the general public. If a qualified appraiser then determines that the property’s fair market value is reduced by the easement to $600,000, the charitable donation would be valued at $400,000. If the donor were in the 35% tax bracket the tax savings would be $140,000:

($400,000 X 35%) = $140,000 (Approximate tax savings)

While virtually all conservation easements reduce property values, there is no rule of thumb for determining the diminution in value. Reductions in value can range from less than 10% to more than 90% of the fair market value depending on the limitations put on the property and the purposes for which it can thereafter be used. The reduction tends to be greatest where a highly restrictive easement is placed on prime developable land in an area experiencing intense growth.

PHOTO BY JENNIFER MATHES

Limitation on Annual Charitable Deductions

The tax law limits the maximum annual charitable deduction a donor can take on gifts of appreciated property, which includes gifts of land and conservation easements. This deduction is limited to 50% of the donor’s adjusted gross income in the year of the gift with any remaining deductible amount to be carried forward for up to 15 additional years.

The direct costs of preparing a conservation easement donation, the legal review of its text for conformity with the Federal code, and the stewardship contribution are fully deductible to the taxpayer. Other costs not directly associated with preparing the easement, such as an appraisal, accounting, or legal fees relating to value and/or tax treatment, may only be partially deductible for tax purposes. Donors should be sure to consult their tax advisor to confirm the tax treatment of all such expenses.

“Each generation has its own rendez-vous with the land...By choice or by default, we will carve a land legacy for our heirs.”

— STEWART L. UDALL, “THE QUIET CRISIS”

PHOTO BY JENNIFER MATHES

PHOTO BY JENNIFER MATHES

ESTATE TAX BENEFITS

Reduction of Taxes

Estate taxes may prevent a family from passing land easily from one generation to the next. When landowners die and leave land to their children, the heirs may find that the property has appreciated dramatically since it was purchased, making it difficult to pay inheritance and estate taxes. This may force heirs to sell all or part of the land to pay the estate tax.

The federal estate tax and state inheritance tax are based on the fair market value of a property at the time of a landowner’s death. Because conservation easements reduce the appraised fair market value of the land, an easement donated by a landowner prior to death, or by will, reduces the total value of the estate. While annual income tax deductions for such gifts are limited, as discussed, the reduction in federal and state estate taxes can provide significant additional tax savings.

Estate Tax Exclusion

Estates are entitled to exclude from taxation a portion of the estate net assets equal to a percentage of the value of a qualified conservation easement placed on the property by the decedent or his/her family. The maximum exclusion of $500,000 potentially represents substantial tax savings. The qualification for and calculation of this exclusion is dependent upon a number of intricate considerations which should be carefully reviewed by the landowners and their advisors.

Donating an Easement by Will

This option results in an estate tax benefit but not an income tax benefit. If the landowner intends to donate an easement by will, it is necessary during his/her lifetime to agree upon the terms of the easement with Willistown Conservation Trust. This collaborative planning ensures that the easement meets the conservation goals as well as the objectives of WCT. The proposed easement may be added as a codicil to the landowner’s will, with specific instructions to the executor to complete the easement in the event of the landowner’s death. The will can be amended later if family or financial circumstances change, or if the landowner grants the easement in his/her lifetime. This results in protected land and potentially lowered estate taxes.

LIFETIME GIFT TAX BENEFITS

The donation of a conservation easement reduces the appraised value of the land, and thus may reduce federal gift taxes associated with a gift of land to others during the donor’s lifetime.

PHOTO BY JENNIFER MATHES

THE EASEMENT PLANNING PROCESS

For Willistown Conservation Trust (WCT), the most important part of the easement process is understanding the donor’s individual needs and desires in planning for the future of his/her property. WCT will then work closely with the donor to design a Conservation Plan that will preserve the natural and scenic characteristics of his/her property, meet his/her specific financial objectives, and further the conservation goals of WCT and the community.

Because easement donations require approval by WCT’s Board of Trustees, the Conservation Plan must meet the criteria for accepting easements established by WCT. For landowners interested in receiving favorable tax treatment, WCT will carefully research and document the “conservation purposes” of the easement.

CONSERVATION EASEMENT DONOR

“The planning process of preparing the easement documents took some time, but it was enjoyable because we got to know the capable staff at WCT. Agreeing on details like the location of the new house and barn and trail corridors was easy because our thinking was parallel.”

JANICE MURDOCH

—

EASEMENT PLANNING STEPS

1. Defining the Landowner’s Objectives | WCT will meet to discuss landowners’ desires for the future preservation of the property and to understand the family’s financial and tax planning considerations. WCT’s land experts will walk the property with the landowner and evaluate the natural, historic, and scenic resources of the property.

2. Preparation of the Proposal and Cost Estimate | A proposal and cost estimate will be presented to the landowner for planning and preparation of the easement documents.

3. Evaluation of the Property and Preparation of Natural Features Map | WCT will prepare a natural features map of the property that carefully details its physical characteristics, highlighting sensitive resources.

4. Development of Conservation Plan Proposals | One or more conservation plans will be proposed for the landowners’ consideration.

5. Preparation of the Conservation Plan and Draft Conservation Easement Agreement | WCT will draft conservation easement documents for review by the landowner and his or her advisors.

6. Preparation of Background Documentation Report | WCT will prepare a baseline documentation report establishing current conditions of the property, including research intended to meet IRS requirements for easement donations.

7. Approval, Signing, and Recording of the Final Easement Agreement | The final easement agreement will be approved, signed, and recorded with copies of the documents delivered to the landowner for safekeeping.

If there is an existing mortgage on the property at the time of the easement donation, the lender is required to subordinate the mortgage to the conservation easement.

PHOTO BY JENNIFER MATHES

ESTIMATING THE COSTS OF PREPARING AN EASEMENT

The landowner is required to reimburse WCT for the costs of preparing an easement.

These costs will be estimated in the proposal prepared for the landowner at the outset of the project, and will cover the materials and staff time needed to complete the easement. In addition, easement donors will have their own legal, appraisal, and in some cases, surveying costs to consider. Surveying needs vary widely and depend upon the nature of the Conservation Plan in which the landowner is interested. In many cases no surveying is required.

In addition to the preparation costs, WCT requires a one-time stewardship contribution in order to ensure that WCT is able to meet its obligation to uphold the terms of the easement in perpetuity.

The amount of contribution requested is based on the size of the property, the complexity of the easement, and the amount of staff time that will be required on an annual basis to administer and monitor the easement. The stewardship contribution is also designated for legal fees should the need ever arise for WCT to meet its obligation to defend the terms of the easement.

The easement stewardship contribution and most of the costs of preparing the easement are potentially deductible for income tax purposes.

PHOTO BY JENNIFER MATHES

AFTER SIGNING

Once the landowners have donated a conservation easement, they will join the ranks of Willistown’s esteemed community of conservationists. Every year, WCT’s Stewardship Team will visit all conserved properties, and they encourage landowners and property managers to ask them questions about the land and how to manage it.

Additionally, WCT offers unique opportunities to conservation easements donors that connect with our Core Activities: Bird Conservation, Community Farm, Education and Outreach, Land Protection, Stewardship, and Watershed Protection. Offerings include a Bird Box program, as well as a Habitat at Home initiative that teaches landowners how to garden sustainably for the benefit of all species. If a landowner’s property contains a stream, s/he may also have the chance to participate in WCT’s Watershed Protection Program’s stream monitoring program that studies the impact of land conservation on the health of local waterways.

“WCT’s Stewardship staff helped us gain a complete understanding of the Conservation Easement on our property. They worked with us to make certain that improvements [we were planning] to our property were in compliance with easement while maintaining an environment healthy and beneficial to the land and the wildlife that enjoys it.”

— HOLLY SPINNER

PHOTO BY JENNIFER MATHES

CONSERVATION EASEMENT DONOR

WILL YOU JOIN THE CONSERVATION MOVEMENT?

PHOTO BY JENNIFER MATHES