As a rancher, I am continuously concerned about the future of our cattle operation and my family’s ability to remain in the livestock business. I think this is true for most ranchers and landowners in the ever changing livestock industry. For many years I was involved in agriculture financing with Yosemite Farm Credit and witnessed firsthand some off the pain and hurdles ranchers face trying to keep their land in the family and their operations viable.
Looming on the horizon at some point is the ongoing battle with and constant debate over the ever changing estate taxes. How will future generations pay a large estate tax bill that is based on a land value at its “highest and best use”, which someday may be vineyards, walnuts, almonds or God forbid another subdivision? The estate tax doesn’t take into consideration the habitat the land preserves as a working landscape, such as the contributions a working ranch makes to the local economy or resources the land provides like clean air, clean water, carbon sequestration and food security.
Though estate taxes are most often discussed when talking about a generational turnover, there are also other issues to consider. Some of those issues, for example, can the ranch sustain the eldest generation while allowing the next generation to come in and start the process of taking over? If that next generation is starting or currently has a family can the operation support both families? Can the eldest generation retire on the ranch that may have been in the family for a generation or more before?
These are questions ranchers face day to day. Luckily, there are several organizations working in the rancher’s best interest such as the local, state and national Cattlemen’s Associations who fight for the rancher to keep regulations in check and for favorable legislation at all levels. The industry programs like “Beef Check Off” and the beef councils also do a great job creating and sustaining demand for our beef products, by building markets and educating the public about the health benefits of our product and our industry.
However, there are also other organizations like California Rangeland Trust working to keep ranchers ranching. CRT is dedicated to keeping ranchers ranching through the use of conservation easements and other tools. Conservation easements are a voluntary agreement with a land trust that is a permanent action on the land to preserve rangeland. This tool can also provide for relief of some financial burdens, and may help keep the current and future generations in ranching, and can help keep urban sprawl from creeping into rangeland.
For those unfamiliar with conservation easements, they are a completely voluntary action on the part of the land owner to make an agreement with a land trust that the land will remain as grazing land and undeveloped forever or for what is termed “in perpetuity”. The conservation easement can either be donated to CRT or it can be purchased from the landowner.
So how does an easement help with the prior mentioned estate tax issues facing livestock landowners? With a permanent agreement (an easement) that the land cannot be developed, the land value is based as grazing land. This value is lower than most other property values and thus decreases property and estate taxes. And it also prevents the ranch from being subdivided or converted into more intensive agriculture.
A purchased easement may provide a rancher with an infusion of capital funds. Many of the ranchers that California Rangeland Trust has assisted with a purchased easement use the funds for future inheritance taxes, or to improve operations, or prepare for retirement.
Please remember that if you are considering an easement, be sure to consult legal counsel and/or your tax advisor.
There is a concern that a conservation easement means loss of control of the land and operation with the addition of more regulations. However that is not usually the case. CRT does not get involved with the management of the ranch. Once a year CRT will monitor the ranch to ensure that the agreed upon terms in the easement are being met.
California Rangeland Trust’s Board of Directors is comprised of ranchers who understand the values and needs of their fellow ranchers. CRT’s goal is not only to protect the land but to protect the ranching way of life and help ranchers pass the legacy down to future generations.
I joined the California Rangeland Trust Board of Directors because the organization truly understands the aspects of ranching, including the business, the day to day operations and its relationship and stewardship of the health of the land and its diverse wildlife and native plant species. With 120 families on the organizations waiting list to proceed with an easement, it is exciting to be on the Board of Directors and help guide the organization to meet funding needs so those families can achieve preserving their land and continue ranching way of life for generations to come.