"In my experience with easement donors, the bottom-line motivation is preserving the beauty of the land for the future. But tax incentives help, and in order to accomplish the state's ambitious million-acre [open space] preservation goal, we need every inducement we can get."

Michele Byers, Executive Director, New Jersey Conservation Foundation

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A.. You have reason to be concerned. Federal estate taxes can be as high as 55 percent. Many heirs do not have the cash to pay these taxes and are forced to sell the family land. Donation of an easement or a portion of your lot to a nonprofit organization or government agency can help reduce estate and other taxes while preserving the land. To explore your options, make an appointment with an estate planner or attorney. Then contact the Great Swamp Watershed Association. We’ll put you in touch with an appropriate land-conservation group to work out an arrangement that will enable your children to keep the land and guarantee the protection of its natural resources.

A. When you own a property you possess a bundle of rights. An easement is a legal conveyance that grants another party one or more rights for the use of your land, such as the right to build a house, cut a tree or access a stream. An increasingly popular method of preserving land is to transfer a property's development rights to a land trust or government agency who then retires them. The transferred deed is known as a conservation easement. To further protect the land, additional restrictions are often put in place. Common prohibitions in stream corridor areas include:

• No disturbance or alteration of native vegetation,
• No removal of topsoil, dredging, or excavation of stream channel,
• No dumping of trash,
• No ornamental landscaping, and
• No construction (Comastro 1997).

Aside from safeguarding ecologically valuable lands, conservation easements may afford grantors significant tax benefits.

A. Land or conservation-easement donation to a nonprofit with 501(c)(3) status, or to a public agency, may entitle you to a charitable gift deduction on your income tax. Similarly, if you sell your property to an eligible organization at a bargain rate, the difference between the sale price and market value may count as a charitable contribution. To be taken as a tax deduction, your gift must satisfy three requirements of Section 170 of the Internal Revenue Code:

• It must be a qualified real property interest;
• It must be given in perpetuity to a nonprofit or government; and
• It must be donated exclusively for conservation purposes.

Under current law, if the value of your charitable contribution exceeds 30 percent of your adjusted gross income, the remainder can be carried over for up to five additional years. Keep in mind that it's up to you, the landowner, to make the case for your deduction to the IRS. To do so, you will need to obtain an appraisal to support the value of your deduction, and you must file the appropriate form with your tax return.

If your land has appreciated greatly in value since you first purchased it, you would owe capital gains taxes. You can eliminate or reduce the amount you'd have to pay the government by donating the property or selling it at less than its market value. Also, if you eventually sell land encumbered by a conservation easement, your capital gains taxes would be lower than if you hadn't retired the property's development rights.

Although it depends on your local tax assessor, there is a good chance you will reduce your property taxes if you decrease the amount of acreage you own or retire the development rights on your land.

It's always best to make succession arrangements while you are still alive. This will help ensure that your wishes are carried out and reduce the estate tax burden for your heirs. That said, a new post-mortem clause in the tax code will give your heirs nine months after your death to agree to retire the development rights on a portion of the land in your estate, potentially preventing a forced sell-off. Also, if certain criteria are met, Section 2031 of the tax code allows up to 40 percent of the value of land subject to a conservation easement to be exempt from estate taxes.

A. You may not need to develop your property to generate income. Consider a bargain sale of your ecologically valuable land to a nonprofit or government agency, whereby you sell at less than the market rate. There are many other income-generating, land conservation options. One possibility is a limited development whereby you divide off and sell one lot on the least environmentally sensitive portion of your property. You could then place a conservation easement on the section of your property containing woodlands, wetlands or other distinctive natural features. Or, you could transfer the title to these ecologically valuable habitats to a conservation group. Portions of Peter Frelinghuysen's property and Hartley Farms, both in Harding Township, were protected by combining limited development with easement and full-title conveyance.

A. The Streamways Project is designed to complement other conservation efforts in the area. For example, the Harding Land Trust is developing a pamphlet on Open Spaces and Natural Places of Harding Township. In addition, the Trust holds several easements on Primrose Brook. The Harding Environmental Commission, meanwhile, is cooperating with the Watershed Association on a build-out analysis of the township, which will dramatize the importance of open-space retention. The Trust for Public Land is working to expand Morristown National Historical Park and the Great Swamp National Wildlife Refuge. New Jersey Conservation Foundation holds title to a number of easements and fully owned properties along the Upper Passaic and Primrose Brook.

The Ten Towns Committee is working to enact municipal ordinances to protect the tributaries of the Great Swamp. The group also has a grant from the NJDEP to implement improvements -- such as the creation of vegetative buffers -- along stream corridors. Several partners, including the USDA-Natural Resources Conservation Service, USDA-Forest Service, Morris County Soil Conservation District, the Passaic River Coalition and a private landowner, have planted a forested buffer along an 1100-foot section of Primrose Brook. The project is intended to demonstrate the short- and long-term benefits of such buffers to water quality and fish and wildlife habitat. In addition, many of the watershed's municipalities and its two counties, as well as the State of New Jersey, are actively pursuing open space preservation (see next question for more details).

A. It's a definite possibility. In recent years, Morris County, Somerset County, Bernards Township, Bernardsville, Chatham Township, Harding Township, Long Hill, Mendham Borough and Township, and Morris Township have all established open-space trust funds. To raise money for these funds, landowners are taxed up to a few cents for every $100 of assessed property value. Monies are used to buy parkland, conserve natural areas and retain agricultural lands. Since its creation in 1992, Morris County's Open Space and Farmland Preservation Trust Fund has helped save thousands of acres in the county.

In November of 1998, New Jersey residents approved a ballot measure to establish a stable source of funding for open-space and farmland preservation. The Garden State Preservation Trust was subsequently established and allocated $1 billion of sales tax revenue over the next 10 years. In addition, voters authorized the issuance of up to $1 billion in revenue bonds to fund the trust. With these monies and the efforts of local and nonprofit groups, Governor Whitman has set the ambitious goal of protecting one million acres of open space in New Jersey during the next decade.

The new stable source of funding will help support the state's Green Acres program, which issues grants and low-interest loans to municipalities, counties, and nonprofits seeking to purchase recreation and conservation lands. Typically, a landowner works with a local government or nonprofit, which then applies for these funds. Sometimes the state negotiates directly with a property owner.

Keep in mind that with Green Acres and open-space trust funds there is strong competition and a limited supply of capital. In addition, the application and negotiation processes can be quite lengthy. To overcome these obstacles, land trusts and government bodies sometimes form partnerships to pool their resources and combine funding, allowing them to save more land than had they pursued an acquisition alone.

A.. Although some easements grant public access, many do not. Unlike Patriots Path, a recreational greenway that runs through Morris County, the Streamways Project is not focused on trail creation. If you do convey an easement, you can expect a representative from the group holding the deed to conduct a baseline survey. The easement monitor will walk the property grounds, take photographs and notes, and ascertain boundaries. The baseline survey is required by the IRS if you wish to take a tax deduction. Also, it will serve as a point of comparison in future years. Following the initial survey, the monitor will make annual visits, to ensure that the terms of easement are being met and to offer stewardship suggestions. The monitor will contact you in advance of his or her visit to set a convenient time and may even invite you to come along. Afterwards, you will be sent a report. If necessary, the easement holder will work with you to address any problems or concerns.

A.. The easement will remain in place; however, it is a good idea to include a reverter clause in the deed. Such a provision names a back-up easement holder should the primary enforcer cease to exist or carry out its duties.

In addition, although your easement should be referenced in your deed, you should make sure that your real-estate agent tells potential buyers about it so they are not surprised. If the buyers have questions that you or your agent cannot answer, they might find it helpful to meet or speak with the easement holder before the closing.

The presence of a conservation easement and proximity to other protected lands can actually be used as a marketing tool. Many prospective buyers are attracted to real estate with scenic, wildlife and recreational values, and some may be willing to pay a premium if surrounding lands won't be fully developed.

A. The Farmland Assessment Act of 1964 enables New Jersey residents to save up to 90 percent in property taxes on lands used for agricultural and horticultural purposes, including forestry. If you transfer title to another party, the farmland assessment status remains in effect as long as the new owner chooses to participate in the program. If, however, there is a change in land use, the new owner may trigger rollback taxes (taxes that would have been paid had the land been assessed at the standard rate minus taxes paid under farmland assessment).

It is possible to have both a farmland assessment and an easement on your land. However, the easement has to be crafted to enable you to meet the minimum income requirements of the lowered tax status. For example, an easement on agricultural land or hayfields should allow you to harvest crops. An easement on woodland can be written to allow for selective timber harvesting, thinning of trees for firewood, or maple syrup production using forestry methods that minimize soil disturbance and other negative environmental impacts.

If greater than half a property is wooded, the owner must work with a state-approved forester and implement a ten-year forest management plan to be eligible for farmland assessment (Frontier Forestry web site, see references).