Conservation Easements: what are they?
A conservation Easement is a strictly voluntary agreement between a rancher, a farmer, or an absentee owner of land who want to see that the land they own will remain as one parcel and the right to subdivide will be extinguished. I think most all governments agree that maintaining open space on a permanent basis is a good thing. When my wife and I placed a conservation easement on our V6 Ranch the I.R.S. said that we had devalued the ranch by half, but that was in 2001. So if you're thinking about how an easement might work today you will need to check with the I.R.S. first to verify how much they will devalue your property for inheritance tax purposes.
In the year 1998, Zera and I both agreed that with our passing we didn’t want the ranch to be fought over by our four children. We have witnessed this many times as older generations left their ranches or farms to the children with their passing even though upon the reading of the will it said that the land will be owned equally by each child. That word equal has a nice ring to it but in reality eight times out of ten it is the first shot fired in a sibling war as one wants to sell because he or she doesn’t live or care about the property, but another sibling wants to make a living from the ranch and loves the land with all one’s might. The next step in this gathering storm is for all the siblings to get lawyered up and the second shot is fired. The bullet is packed with lying, hatred, disgust and the list goes on.
Several years have gone by and the real winners so far are the lawyers who get their share first. This whole gooey mess now ends up in court where the judge decrees that the land be sold and the money be split up equally. Ten years have now gone by and the hate amongst the siblings is as mean spirited as ever but most, if not all, of the money has been spent and love and laughter of a family ranch is gone.
I ask if any of you out there that have property, remember it comes attached with all the emotional baggage that land has always had. While trying to be fair and equal, you must realize there is no such thing for it’s all in the eyes of the beholder and to further muddy the waters, have you considered the rights of all the other critters that live on the land, how are you treating them? For me they should have a place at the table also, because their lives are at stake.
Sooooooo Jack and Zee did you ask the children what they thought? My answer was and is a resounding “No.” for that just opens the door to “Is that fair?” There is no such thing as fair because it resides in each of us differently.
So after working for three years with The Trust For Public Land (TPL) the ranch was appraised and it was now our turn to agree with the appraisal and that half of that value would be given to Zee and I in the escrow. But there was one more hurdle to get over. I told The Trust for Public Land that they wouldn’t be the one to monitor and hold the easement. It would be a new land trust brought into existence by the California Cattlemen’s Association. I told the TPL that the California Rangeland Trust had a better understanding of the inner workings of a family ranch. There was a moment of disappointment from the TPL but I told them this would be a deal breaker and their commission would go up in smoke. Ah! The deal was done and we had enough to pay off the ranch. Another hurdle to overcome but this one was easy. Zee and I used the appraisal for the easement and our gift tax allowance to give the V6 to the Varian Family Trust that our four children have owned since 2001. So for the last 22 years we have been happy renters. Renting a house and grass for our cattle and knowing that all the critters won’t be homeless. Our four children have been left to manage a working ranch that can’t be divided and they are responsible to settle family squabbles, pay the bills, and love each other. The V6 will be happy knowing it will always be indivisible. When it comes to Zee and I, at 85 and 88 we couldn’t be happier.
See Ya,
Jack