Another important legal consideration in deciding the future of your land is determining the type of legal ownership of your land. This determines who controls the land, how it is transferred, how it is taxed, and how liability will be shared, among other things.
Determining which form of ownership is best for you depends on several factors, including the number of people who will be sharing ownership, liability concerns, how income from the land is taxed while you are alive, and how the land is taxed when it is transferred. There is a range of land ownership options. Bringing your goals, or those of your family, to an estate planning attorney with land conservation experience is a great way to sort out which type of personal or business ownership is the best fit. Below are some personal forms of ownership that families have used to achieve their goals:
- Individual Ownership. The ownership of the land is by a single person. Upon the death of the owner, the land is transferred according to the terms of his or her will.
- Joint Tenants. The ownership of land is by two or more people. Upon the death of an owner, shares in the property automatically transfer to surviving owners.
- Tenants in Common. The ownership of property is by two or more persons in specific shares. If one person dies, their share passes according to the terms of their will.
Given that many landowners own their land for their personal enjoyment and privacy, not for income, it may seem odd to consider changing the ownership of the land to a business structure. However, business ownerships can provide an effective mechanism for transferring ownership of your land from you to your family while reducing taxes and limiting liability. Below is a list of some business forms of ownership that familie shave used to achieve their goals:
- General Partnership. The ownership of the land is joint: it is between two or more people. Owners share profits, losses, and liability.
- Family Limited Partnerships. There is a legal partnership agreement between members of a family for the management and control of the land. This is sometimes used to minimize gift and estate taxes.
- Limited Liability Company. Ownership is divided into shares and the rules that run the company are put into a contract and agreed to by all the initial shareholders. This is sometimes used to minimize taxes.