Donating your property to Southern Conservation Trust is simple and straightforward. In an outright donation, you give full title and ownership of your land. In return, you receive tax benefits in the form of federal and state tax benefits, potential estate tax benefits, and relief from property taxes. A donation of land offers the maximum tax advantages because you may receive a charitable gift benefit based on the full fair market value of your property.
However, you should consider your goals. It is best to discuss possible short and long-term plans for the property with the Trust before making the gift. Your gift of land may not automatically prevent later development unless the property is also secured by a Land Conservation Agreement held by a second entity. If you would prefer the Trust to own the property in the long term, it is important to understand the Trust’s long term costs of managing and insuring the property. Typically the Trust requests an endowment to the Permanent Preserve Fund if long term ownership is expected.
A landowner who wishes to provide both long term land protection and financial support for the land trust’s conservation objectives may be comfortable with donating land to the land trust. A Trust may then resell the donated property, subject to a Land Conservation Agreement (this type of property is known as a “trade land”).
To calculate the economic consequences of donating your land, you should have an appraiser determine the value of your gift. The tax procedures and requirements are similar to a donation of a conservation easement. You would no longer pay property taxes on the donated land, and estate taxes for this land would be eliminated. If you intend to make your gift subject to conditions limiting the Trust’s future use or conveyance of the property, you should consult carefully with your financial advisor to evaluate how this may affect the financial value of your gift.
Donation by Devise and Donation with Reserved Life Estate
Under some circumstances you may wish to donate your land but not give up the use of it immediately. Two options are available: donation by devise or donation with reserved life estate.
Donation by Devise: A gift of land through your will is a donation by devise. You retain full use and control over your land while you are alive and ensure its protection after you are gone. In this case you do not receive an income tax deduction, but your estate taxes are reduced and your heirs may benefit from reduced inheritance taxes.
If you intend to use your will to convey your land (or a conservation easement on the land) to the Trust, you should discuss these plans with us before finalizing your will. Make sure your wishes are clear to your executor if he or she will be negotiating the terms of the Agreement and making arrangements for the long term stewardship of your property after your death.
Donation with Reserved Life Estate: The reserved life estate option provides for your donation of the land to the Trust immediately. You would retain use of all or part of the donated land during your lifetime or the lifetime of designated immediate family members. The value of your donation for tax purposes is based on the fair market value of the property, less the estimated value of your life interest in the property (according to Internal Revenue Service tables based on your age and life expectancy). The tax advantages are less than with an outright donation, but are greater than with a donation by devise.