I'm recovering from a week-long bout of pneumonia and the meds are finally allowing me to get off the couch, albeit barking like a stranded seal. I hope to have the energy today to give more push on this topic to our elected officials.
What I provide here is 30 years of experience as a CPA whose specialty was Trust and Estate planning. Over the course of that career I've probably assisted 30 families with CEs that was integral to their transition planning for the family business. I've been the Trustee for a family for over 20 years and I have two ranches in that Trust, one of which has a CE placed on it.
Let's remember, for the most critical properties we hope to keep as working farms/ranches, these are family businesses and livelihoods, not recreational playgrounds.
Here are some facts I wish promoters of the anti-perp mantra would understand. I write these, knowing full well that most would have zero reason to understand them as they've not dealt with it in anything other than rhetorical abstraction, such as a debate on a forum like this. That makes sense. If not for my experience, I'd have no basis to relate.
Of the 30+/- CEs I've done, it was the best solution in a toolbox of imperfect solutions. I suspect twice that many families considered the idea, but it wasn't the right solution for their goals. So, we never pursued it.
For those who did it, they didn't do it for property savings, as if you are smart and already have an ag exemption on your land, a CE is not going to save you a penny in property taxes.
For those who did it, they were facing a huge estate tax bill, usually when there was only one remaining parent. It is easy to defer estate taxes on the death of the first parent. The challenge comes with no surviving spouse to pass it to.
Hardly any did it for the income tax benefits. These folks don't have enough Adjusted Gross Income to utilize even a small percentage of the full charitable donation deduction. Most of a charitable donation deduction goes to waste for these working families.
Most did it for one, or a combination of, three reasons:
1. They sold the easement, or did a bargain sale of the easement, as they needed cash, not tax deductions. This gave them a shot of cash, usually helped pay off some debt, and allowed them to stay on the land. Yeah, it resulted in some capital gain tax, but selling, even at a discount was helpful.
2. They were facing a huge estate tax bill. Gallatin Valley might be an extreme example, but if you see an aerial view today, versus 20 years ago, you will see which properties are under CEs and which were not at the time someone passed. Just look at the farms gobbled up by developers. Those parcels were usually people who didn't plan and when the estate bill came due nine months after death, they needed to have cash from a sale. If you're gonna sell, you may as well get the most money, which will be a developer.
3. They wanted to retain the legacy of this farm/ranch and not allow their kids/grandkids to liquidate it and go live the flashy life. Most of these folks have been on these properties for many generations. Until you sit at the kitchen table and listen to them talk about it and how much it means, what this represents, the hardships endured, it's hard to comprehend how important it is to them that this land not be subdivided or made into ranchettes. Very often they love the wildlife the is increasingly dependent upon these undeveloped lands. They take pride in the many other intangibles their properties provide; water quality, quiet space, open views, you name it. Under no circumstance do they want that to go away. Most have existed on very little over their lives and their not of the "growth cures all problems" mindset that seems to be sweeping over Montana. In fact, these folks reject that notion and are true minimalist and thus believe in conserving what they have.
The decisions to do this were usually 2-5 year decisions. Once the decision was made, it was usually another 2 years to get everything in place. It required a lot of financial planning, changing bank loans/collateral, maybe gifting to the next generation, and many other important considerations. None of this was them plopping down at my desk and saying, "I talked to Joe at the coffee shop, I wanna do a CE, can you have that ready by Monday?"
With all of this, and much more, taking into account, it is very frustrating to see the ideologues play "God" for nothing more than imposing their own world view over people who don't have that luxury or, let alone any inclination to tell others who to use their property. The spoonfed cronies act as if a CE is some insignificant decision, made on a whim, chosen from many other options, for some evil reason.
That level of arrogance and self-righteousness is only exceeded by the ignorance of people pushing these restrictions. I have yet to encounter any person who is against CEs, even in perpetuity, who has ever been involved in one. To them, this is an abstraction that makes for good electioneering, raise some funds for their campaign, and be able to tell their like-minded friends how they should those conservation-minded folks (working farmers and ranchers) where the bear shits in the buckwheat.
That pisses me off to no end. Yeah, this session will be filled with all kinds of stupid bills related to hunting, technology, seasons, new ways to kill more animals, and you name it. Yet, none of those other bills are as important to me, to people I worked with for decades, to wildlife, and to the core of what makes Montana the place it is, as these attacks on the property rights of working landowners.
We all bemoan the loss of character of a place we love. You read about Montana going through that in a big way. I live in one of the cancer cells of that change. That rapid change makes this core of committed conservation-minded landowners who are holding out agains this tide even more critical to retaining what we have, for them, for us, and for wildlife.
When you think about blindly supporting this notion to take away one of the tools needed to solve some complex challenges, I ask why we should take away a tool, CEs, that might be the best solution for them and their goals. And I'd also ask, since when is it anyone else's business to tell them what they can/can't do, for however long of a window, with property they and their family have struggled to build and keep for generations?
