A conservation easement can be a financial-planning tool for those who love their land.

Even in these turbulent times, people are thinking about the future of their land. As the number of people approaching retirement increases, more people are wondering how they will be able to afford to pass on their cherished family land to their children. Some want to keep their working farm or forest in production while others simply wish to preserve their land for its wildlife habitat and scenic beauty.

Conservation easements are one tool that these landowners can use to meet their estate or financial-planning needs as well as their philanthropic goals. A conservation easement is a legal agreement between a willing private landowner and a land trust or government agency. The conservation easement protects wildlife habitat, scenic vistas, productive farmland, and important wetlands or forests.

The agreement specifies what activities are allowed on the land, which may include farming, forestry, recreation, and limited construction. The conservation easement also defines what activities are restricted permanently, such as development or subdivision, mining, and other activities that would damage the conservation values of the property.

The permanent protections remain in place even if the easement donor gives or sells the land to others.

Through these agreements landowners donate their right to develop or subdivide their land to protect specific natural, scenic, or productive resources. The landowner continues to own and manage the land and continues to pay local taxes. In return for the donated conservation easement, the land trust agrees to monitor the land to ensure that the conservation protections are upheld in perpetuity.

Unfortunately, not many people know about conservation easements. Savvy financial advisers can help their clients who cherish their land understand the multiple benefits of such easements.

"It's a good thing to keep in the back of your mind," says Rod Clugston, of the Coeur d'Alene office of Edward Jones. "Especially for someone who wants to protect their land, it can be fantastic."

As with any charitable gift, the donor may be able to take a federal income-tax deduction.

"My client mentioned he wanted to keep his land intact," says Clugston. "With the easement he received estate-tax and income-tax benefits, but also kept his land the way he wanted it. It was a real win-win situation."

Now, landowners have an additional reason to do a conservation easement before the end of 2009. The 2008 Farm Bill extends a temporary tax incentive that raises the deduction a donor can take for the charitable gift of a conservation easement from 30 percent of their income in any year to 50 percent and allows qualified farmers and ranchers to deduct up to 100 percent. The bill also increases the number of years over which a donor can take deductions to 16 years from six years.

Not only are there income-tax benefits, but in some cases the conservation easement also may bring the value of the land below the estate-tax limit.

After her husband's death, Sandpoint resident Nicky Pleass became concerned about the future of her land after she was gone. She feared that her heirs would be forced to subdivide or sell the land to pay the estate taxes. Pleass thought that an easement might be the answer she was looking for. The terms of the conservation easement allow one additional home site on the 188 acres, but because Pleass gave away most of the development rights, the resale value of the land has been reduced.

"My primary reason for the easement was my love of the land and my concern about the animals. But now my daughter has the choice whether to live on the land," Pleass says. "She won't be forced to sell it to pay the inheritance taxes."

A conservation-easement donation requires not only a willing donor, but a qualified conservation organization to accept the donation. That organization needs to be able to show that the donation closely fits its particular charitable mission.

Every easement is tailored to suit the needs of the land and the landowner. An agreement to protect rare wildlife habitat might prohibit any development on the land, while one on a farm might allow continued farming and the building of additional agricultural structures.

For people who own land with important resources, donating a conservation easement can help them conserve the land, while maintaining their property rights and maybe realizing a tax benefit.