Wyoming is known throughout the world for its open spaces, abundant wildlife, scenic beauty and ranching heritage. Ranches occupy the most agriculturally productive lands in the state and are critical to Wyoming’s wildlife through their location along valleys and waterways that frequently serve as winter range, birthing sites and travel corridors. These contributions of ranchlands extend far beyond the borders of ranches themselves due to the fragmented and intertwined nature of public and private land ownership within the state.
Eshelman Basin Ranch Easement
However, in many areas of Wyoming, ranches and ranchland are disappearing. Studies have predicted that 48 million people will be added to the West by 2050, resulting in 26 million acres of open space being converted to residential and commercial development. Of the 11 western states, Wyoming is expected to have the third highest growth rate. These pressures for land conversions are compounded by low profit margins from ranching, the increasing average age of ranchers, a lack of recruitment of new individuals into the profession and high inheritance taxes. As the land becomes fragmented, the wildlife habitat, watersheds and scenic splendor sustained by Wyoming ranches for generations are being swept away forever.
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Stock Growers Ag Land Trust Conservation Easement FAQs
What are the financial benefits of a conservation easement?
How are conservation easements valued?
Can a conservation easement ever be amended or terminated?
Will a conservation easement prevent me from using my property as collateral for a loan or mortgage?
What is meant by placing a conservation easement on a property “in perpetuity?”
Can there be title insurance on a property that has a conservation easement in place?
Will a conservation easement result in the loss of my control over the management of my land?
What about the mortgage on my property?
Can I have oil and gas development on my property if it has a conservation easement?
Do conservation easements require public access?
Who gets the money when a conservation easement property is sold?
Can a land trust sell the conservation easement I have granted to them, or otherwise dispose of it?
Will conservation easements hamper economic development in my community?
What happens if the Land Trust goes defunct?
What are the financial benefits of a conservation easement?
Conservation easements may be purchased, donated, or bequeathed as part of a landowner’s will. The value of a conservation easement is determined by a qualified appraiser, and will vary considerably depending upon the terms of the agreement and local development pressure. Conservation easement values for working ranches in the West often range from 30% to 60% of fair market value of the property.
Conservation easements are often purchased at a price below its appraised value, and this difference in value may be considered a charitable donation that qualifies for reductions in both income and estate taxes. At present, conservation easement donors may deduct up to 50% of their adjusted gross income over a 16 year period. Qualifying farmers and ranchers may deduct up to 100% of their income, over the same time period.
Restricting a property’s development rights can substantially reduce inheritance taxes that otherwise may force a family to sell all or a portion of their ranch. Landowners may also be eligible for an additional inheritance tax exclusion of up to $500,000.
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How are conservation easements valued?
Most conservation easements are valued according to what is called the “before and after test”. The appraiser establishes the value of the property both with and without a conservation easement, and the difference between the two is the value of the easement. The appraiser will rely on comparable sales of nearby properties, with and without conservation easements.
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Can a conservation easement ever be amended or terminated?
One can amend the provisions of a conservation easement, as long as such amendments do not result in a net loss in the ability of the easement to maintain the natural features of the property or reduce the easement’s value. Conservation easements can be terminated by judicial action whenever the purpose of the easement can no longer be fulfilled, and also by government through an act of condemnation.
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Will a conservation easement prevent me from using my property as collateral for a loan or mortgage?
No. However, the amount of the loan must reflect the reappraised value of the property.
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What is meant by placing a conservation easement on a property “in perpetuity?”
“Perpetuity” simply means that a conservation easement cannot be amended or terminated unilaterally by the grantor, which is no different from any other deed or contract. Perpetuity is a requirement of federal tax law for an easement donation to be tax deductible.
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Can there be title insurance on a property that has a conservation easement in place?
Yes.
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Will a conservation easement result in the loss of my control over the management of my land?
Most agricultural conservation easements put limitations on future development of the property in order to retain the land’s agricultural capacity and open character. The terms of most agricultural conservation easements are designed to preserve these features without undermining the ability of the landowner to make day-to-day decisions for the management of their ranch.
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What about the mortgage on my property?
When an easement is recorded, any mortgage on the land must be subordinated to the easement. This allows the conservation easement to remain intact if the property is ever in foreclosure. Otherwise, in the event of foreclose the mortgage would received priority and the easement may be ruled invalid. When considering a conservation easement, one should confirm that the lender is willing to subordinate the mortgage and also that any reduction in the market value of the property would not fall below the mortgage amount.
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Can I have oil and gas development on my property if it has a conservation easement?
Conservation easements that qualify for federal income tax benefits must prohibit surface mining. If the landowner does not own the mineral rights, a letter must be obtained from a certified geologist stating the chances of mineral development are “so remote as to be negligible.” The extraction of minerals, including oil and gas, by techniques that have minimal surface disturbance may be allowed. However, such techniques cannot have a significant negative impact on the natural and productive values of the property.
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Do conservation easements require public access?
No, decisions regarding public access to the property are typically left to the landowner.
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Who gets the money when a conservation easement property is sold?
The landowner gets all the money from the future sale of lands upon which there is a conservation easement. The only exception would be sales that involve the termination of the easement. Typically, this would only occur when the land is being expropriated by the government for public purposes. In such a case, proceeds from the sale of the land would be divided between the land trust and the landowner according to the proportion of the total value of the land that the easement represents. This value is determined by a qualified appraiser.
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Can a land trust sell the conservation easement I have granted to them, or otherwise dispose of it?
Although conservation easements are considered both a contract and a property interest, the easement agreement does not give the organization holding the easement the right or ability to sell or dispose of the easement for financial gain. Rather, it only gives the organization holding the easement the authority to restrict the use of the land as specified in the agreement. Most conservation easements contain provisions that they cannot be transferred to other organizations without the mutual consent of both the easement holder and the landowner.
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Will conservation easements hamper economic development in my community?
Current growth patterns across North America and the West show that people are choosing to locate and remain in areas that have high natural amenities such as scenic vista, abundant recreational opportunities, clean air, clean water, and wildlife. Open spaces conserved through conservation easements maintain these features and preserve the quality of life that attract businesses and people to the region.
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What happens if the Land Trust goes defunct?
Conservation easement deeds typically contain provisions for transferring the easement to another like-minded nonprofit organization, should the holder of the conservation easement cease to exist.
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