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Estate Planning Should Include Questions About Property Taxes

Individuals or families with a large amount of property should consider things like property tax when looking toward the future. The way land is used and how the title is held could become important in long-term planning, especially if families plan to pass the real estate along to heirs. In Massachusetts, entities in charge of trust-owned properties are pushing for exemptions that could change how these matters are dealt with.

In one case, which deals with 120 acres managed by the New England Forestry Foundation, the question is whether the land trust should pay any property taxes at all to the town where the acreage is located. Reports indicate that the trust has always paid a reduced tax, but the organization is suing the town and requesting a full exemption. The nonprofit organization states that the land provides a public good. Though that statement is vague, it is what is used to determine whether a property is taxed.

A law professor states that case law is minimal on this subject, and she expects to see an increase in the number of cases of this type brought to court. She said that outcome is likely regardless of which side wins the dispute. As economically-strained local governments look for income avenues and land trust owners work to reduce costs, the two sides can come into conflict.

For smaller land trusts that don’t provide a public benefit, the trust set up may still reduce a number of other taxes for owners and heirs. Estate planning can be a complex endeavor with many decisions to make, so it’s important for individuals to have a strong understanding of legal issues and their options.

Source: The Real Deal, “Massachusetts case could roil land trusts in New York City” Julie Strickland, Feb. 05, 2014

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