POINTS OF CONSIDERATION
Individuals interested in conserving their land should consider the following:

• Your current management goals and vision for the property’s future
• Whether you want to protect all or a portion of your land
• Whether you want to retain ownership of the land or transfer title to a tax-exempt organization like Tar River Land Conservancy
• The impacts it will have on your income, property, estate or gift taxes
• Your timeline: is this something you want to do now, over a period of years, or through your estate
• How it will effect present and future generations of your family

CONSERVATION EASEMENTS

Conservation easements are a good option if you want to provide protection for your land while retaining ownership. Conservation easements are legal documents that are recorded like any other title interest that “runs” with the deed. Once in place, present and future owners of the tract are bound by its terms. Restrictions in conservation easements are written to fit the landower's objectives for the property. They are designed to retain the land’s natural, scenic, historic, or open space characteristics and to protect against intentional or inadvertent destruction of those features. Conservation easements may be placed on all or a portion of a property.

Landowners grant conservation easements primarily because they wish to protect land which they value and which will be important for its natural features in the future. Financial benefits of granting a permanent conservation easement can also be important. Depending on your financial situation, a conservation easement may provide a reduction in estate, gift and income taxes. Typically, the landowner may continue to use and enjoy the land the same way as before the easement was placed on the property, as long as it is compatible with the terms of the easement agreement.

Easements are written to ensure good land stewardship both now and into the future. Their monitoring and enforcement are the responsibility of Tar River Land Conservancy, or whichever organization holds the easement. Tar River Land Conservancy staff visits each of its protected properties at least once a year to ensure that the terms of the easement are being upheld. Each landowner will be asked to make a voluntary contribution to TRLC's Stewardship Endowment to cover the cost of monitoring their property in perpetuity. Monitoring costs for each property are based on the size of the property, the travel distance required to visit the property, and other factors. If a landowner is unable to make a stewardship endowment contribution, Tar River Land Conservancy will need to raise the funds from other sources. However, this may greatly extend the time it takes to complete a conservation easement project.

DONATION OPTIONS

Conservation easements may be donated or conveyed as a part of your estate. They may be used in combination with the other land protection tools which are described in this summary of options. A landowner may convey a conservation easement to Tar River Land Conservancy, but give or sell the underlying fee interest to another entity or individual. A conservation easement may be donated during your lifetime or by bequest. While a conservation easement donated through your will does not provide income tax benefits, it does reduce the taxes associated with your estate. The timing of the gift and the rights of ownership to be conveyed are part of the negotiation process.

Because an easement can take some time to negotiate, you may want to add a codicil to your will stating your intention to grant the easement to Tar River Land Conservancy. In the event of your death, the executor is then obligated to complete the easement transaction. It is always advisable to attach as complete an easement document to the will as is vailable, granting the executor discretion to make the usual and customary modifications required by TRLC.

Outright Donation

In an outright donation to Tar River Land Conservancy, full title and ownership to the land is given in fee simple now, and tax benefits in the form of income tax deductions, potential estate tax benefits, and relief from property taxes are immediate possibilities. A donation of land offers the maximum tax advantages because a deduction for the charitable gift may be taken based on the full fair market value of the property. When the total value of the deduction cannot be taken in one tax year, the remaining deduction may be carried forward.

Landowners who wish to achieve the long-term protection of their land as well as provide financial support for Tar River Land Conservancy should consider a donation to TRLC with the stipulation that the resale of the donated property be subject to a conservation easement. If Tar River Land Conservancy is expected to retain ownership of the property (and not resell it), the landowner should inquire about how TRLC will manage the property and cover the costs of ownership. A stewardship endowment contribution, made by the donor or raised from other funding sources, may be necessary to ensure TRLC has the capacity to hold the property long-term.

The economic benefits of donating property can be achieved by having a qualified appraiser determine the value of the gift. Once the gift is made, the landowner will no longer pay property taxes on the land, and it will no longer be part of the landowner's estate. If the landowner intends to make a gift subject to conditions that limit TRLC's use or ability to convey the property, the donor should consult with a financial advisor to ensure that the gift is made in a manner that does not reduce the financial value of the gift.

Donation by Devise and Donation with Reserved Life Estate

If you intend to use your will to convey land or a conservation easement on land to Tar River Land Conservancy, we request that you discuss these plans with us. We would like to understand your objectives and work with you to ensure not only that they are compatible with our conservation mission, but also that your expectations for the land can be met. You should also be sure your wishes are clear to your executor if he or she will be negotiating the terms of an easement and making arrangements for the long-term stewardship of your property on behalf of your estate.

Under some circumstances you may wish to donate your land but not give up the use of it immediately. In this case two options are available: donation by devise and donation with reserved life estate.

Donation by Devise: A gift of land through one’s will is a donation by devise. The owner retains full use and control over the land while living and knows that the desired protection will be carried out after his or her death. In this case the donor does not receive an income tax deduction, but estate taxes are reduced and heirs may benefit from reduced inheritance taxes.

Donation with Reserved Life Estate: This option provides for the immediate donation of the land to Tar River Land Conservancy. The donor retains the use of all or part of the donated land during the donor’s lifetime, or the lifetime of designated immediate family members. The value of the donation for tax purposes is based on the fair market value of the property less the estimated value of the donor’s life interest in the property as determined by Internal Revenue Service tables. These tables are based on the age and life expectancy of the donor and other designated immediate family members who may retain a lifetime interest. Retaining a life estate provides current tax advantages that are less than those of an outright donation but greater than a donation by devise.

SALE OPTIONS

Sale at Fair Market Value

Tar River Land Conservancy does not often purchase land. However, from time to time we may consider purchasing a piece of property at fair market value, as determined by a qualified appraisal. TRLC has limited funds available for buying land and must fundraise to make any purchase possible. The property in question must therefore be identified as a priority for acquisition. If an owner sells land for its full value and it has appreciated since it was originally purchased, the owner will be liable for income tax on the capital gain. This capital gains tax may significantly affect the net profit from the sale.

Bargain Sale

In a bargain sale the owner sells land to Tar River Land Conservancy at less than the fair market value. The difference between the selling price and the appraised fair market value is considered a donation. The owner may then be eligible for a charitable income tax deduction equal to the difference between the full price and the bargain price. For example, if land with a fair market value of $50,000 is sold to Tar River Land Conservancy in a bargain sale for $30,000, the seller would receive $30,000 and a charitable deduction of $20,000 for the land value that is donated. Also, because the land was sold for less than fair market value, there would be a smaller capital gain to be taxed. Depending on one’s financial situation, a bargain sale may be advantageous. A tax advisor should be consulted to determine if a bargain sale is right for you.

Installment Sale

In an installment sale the owner sells a portion of the land to Tar River Land Conservancy with an option to sell the remainder in successive years. Income from the sale would be spread over several years, thereby helping to reduce the current capital gains tax.

Sale with Reserved Life Estate

A landowner may sell property to Tar River Land Conservancy and retain the right of lifetime tenancy for the owner or immediate family. The capital gains tax would depend on whether the sale is at fair market value, at a bargain, or made in installments.

PRIVATE AGREEMENTS

Option

Landowners wishing to donate an easement or sell their land to Tar River Land Conservancy will often be asked to sign an option agreement which allows TRLC time to raise the funding required to complete a successful project within a mutually agreed upon time period.

Right of First Refusal

Some landowners looking to sell their property might want to consider giving Tar River Land Conservancy a right of first refusal. This agreement does not obligate Tar River Land Conservancy to purchase your land and it does not set a sale price. However, it guarantees TRLC the opportunity to match the price offered by another party interested in buying the land.