The Future Is OpenWritten by Pamela Dewell
By Pamela Dewell, Executive Director, Wyoming Stock Growers Agricultural Land Trust
In a 1789 letter, Benjamin Franklin wrote, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
So far, all three remain constant and the intersection of the two certainties is an especially difficult burden, particularly for America’s agricultural community. Passing the family ranch between generations faces many challenges. Frequently there are multiple heirs; some may wish to keep ranching while others would rather have the cash that could be raised by selling out. Or, all of the children are interested in ranching, but the property is too small to support everyone.
Another problem is the federal estate tax and the broad array of factors that influence it. Without careful planning, families can be left with significant estate tax burdens when members pass on. If the family doesn’t have much in the way of cash or stocks and bonds, the only way to pay the estate tax may be to sell the ranch. Similarly, high property values sometimes increase the temptation of heirs to sell out. These challenges may lead not only to ranches being broken apart and sold out of agriculture, but to permanent rifts within families.
A conference is planned for Thursday, June 2 at the UW College of Law that will address conservation easements and how they can be used as effective estate planning tools.
Hosted by UW’s Rural Law Center, Wyoming Stock Growers Agricultural Land Trust, and the Jackson Hole Land Trust, participants will include Wyoming attorneys, accountants, appraisers, planners, realtors and land conservationists. Continuing education credits will be provided through the Wyoming Bar Association and the Wyoming Real Estate Commission. Please urge your family’s advisors to attend.
The conference will feature a wide array of topics including conservation easement basics, contributions and sales, appraisal issues, tax incentives, energy development and more. Professionals and the public are invited to register for the day-long event in Laramie or attend remotely via a live webcast of the conference. For more information visit www.uwyo.edu/law/.
While completing a conservation easement may not exactly be on your bucket list, it might help you with other objectives you do want to achieve - such as reducing estate or income tax burden, keeping the land in your family, or ensuring the operation remains intact and in agriculture.
Did you know…
• A conservation easement can be granted during the landowner’s lifetime or by will; it is even possible for a landowner’s heirs to direct the executor to contribute a conservation easement that has retroactive effect, therefore saving estate taxes.
• Easements can be written to allow continued ranching, recreation (including hunting and fishing) and even limited residential development, provided these uses are consistent with the conservation values of the easement property. Such values may be agricultural, scenic, wildlife habitat or a combination of these.
• Conservation easements do not require public access.
• Conservation easements can be donated or sold. In an easement sale it is typical for the landowner to sell the easement for less than market value and claim a tax deduction for the difference as a charitable contribution. This is known as a “bargain sale.”
The ability of a conservation easement to limit development on a property and the related reduction in the land’s appraised value may have a number of beneficial implications for transferring a ranch within a family and associated estate tax planning. We encourage you to learn more about this important tool through the UW Conservation Easement Conference. You can also contact the Stock Growers Ag Land Trust at 307-772-8751 or wsgalt.org and the Jackson Hole Land Trust at 307-733-4707 or jhlandtrust.org.
A longer version of this article may be found in “Passing It On: An Estate Planning Guide for Wyoming’s Farmers and Ranchers,” a publication of the Wyoming Department of Agriculture.