Conservation Corner: August 9, 1999

Estate Tax Exemptions For Conservation
by James L. Cummins

Conservation easements are the newest tools available for private property owners to preserve property for a specific conservation purpose. Easements enable a property owner to protect habitats on their property while, at the same time, take advantage of substantial tax benefits.

To fully understand conservation easements, one needs to consider the rights that come with owning property. When one places a conservation easement on a piece of property, the owner may give up some rights (e.g., the right to develop the property, etc.). Hunting, fishing and timber management can still be conducted. Restrictions on the use of the property are detailed in the easement, which is perpetual in length. The easement is a legal instrument that is recorded in a particular county.

On August 5, 1997, President Clinton signed into law a modified version of The American Farm and Ranch Protection Act, which provided an exclusion from the federal estate tax for property subject to a permanent conservation easement. The Act allows a 40 percent estate tax exemption for land committed to conservation. It sets a $500,000 cap on tax benefits.

The measure applies only to land within 25 miles of a federally designated metropolitan statistical area as defined by the Office of Management and Budget (i.e., Biloxi, Gulfport, Hattiesburg, Jackson, Memphis, Tennessee, including parts of DeSoto County and Pascagoula), national park (i.e., Gulf Islands National Seashore, Natchez Trace Parkway, Tupelo National Battlefield or Vicksburg National Cemetery), wilderness area or within 10 miles of an urban forest as defined by the USDA Forest Service (e.g., Gulfport, Jackson, Meridian, etc.).

The property must be owned by the descendent or a member of the descendent's family at all times during the 3-year period ending on the descendent's death. The property can be owned by a partnership, corporation or trust if at least 30 percent of the of the entity is owned (directly or indirectly) by the descendent.

When one places a conservation easement on a piece of property, the owner can be assured that the property will remain in a natural state forever. The property owner is rewarded by the fact that the easement will promote his or her conservation ethic while receiving immediate tax benefits.

Conservation easements are increasingly being recognized as a desirable tool for property owners interested in protecting their property. Through the efforts of property owners we can be assured that our cherished natural resources will be passed on.

As in any conservation program, it is best to seek the advice of fish and wildlife and tax professionals with experience in the development of conservation easements.

James L. Cummins is Executive Director of the Mississippi Fish and Wildlife Foundation in Stoneville, Mississippi. Known as "Wildlife Mississippi," the Foundation is a non-profit, conservation organization founded to conserve, restore and enhance fish, wildlife and plant resources throughout Mississippi.