Large holdings in land can lead to major tax consequences especially when the basis is low due to long time ownership. However, creating a land trust with a conservation easement can grant enormous tax relief to an estate. The easement, which freezes development on a piece of land, lowers the value of the property resulting in a reduced tax burden which can be claimed in one year with any overage spread over an additional five. In addition, conservation organizations may be willing to pay for the easement if it is guaranteed to preserve green space or preserve historic locals. However, an easement must be carefully considered as it will be almost impossible to remove or change once created. While this tool is not right for everyone, the right estate could gain much from this little used trust technique.
SeeDave Lindorff, Using Land Trusts as an Estate Planning Tool, Financial Planning, August 24, 2015.
Special thanks to Jim HIllhouse for bringing this article to my attention.
