Rooted in Values: How Gifting Land Can Create Lasting Impact 

With over 2 million farms in the United States, you likely have clients who own farm property. This is an asset that carries emotional significance and complexity and it’s crucial to understand the tax implications and estate planning strategies surrounding farmland. For these reasons, it’s important to explore the benefits of gifting real estate, such as a ranch or farmland, to Greater Houston Community Foundation and how it can help your clients achieve their philanthropic goals while minimizing tax liabilities. Greater Houston Community Foundation and how it can help your clients achieve their philanthropic goals while minimizing tax liabilities. 

Land is often more than just an asset – it’s a family legacy, a source of pride, and a symbol of hard work. As such, it can be challenging for clients to part with it, even in the context of estate planning. However, with the right approach, gifting farmland can be a tax-efficient way to reduce the value of their taxable estate and achieve their philanthropic goals.  

Gifting Land: Multiple Options for Your Clients 

Greater Houston Community Foundation offers a range of options for gifting land, each with its own benefits. Here are some ways to structure a gift: 

• Outright Gift: Donate the land directly to the Foundation, which can provide tax-deductible benefits and may avoid capital gains tax. 

• Bargain Sale: Sell land to a nonprofit. The proceeds could go into a donor advised fund at a discounted rate, which can reduce capital gains tax and provide a tax-deductible gift. 

• Charitable Remainder Trust: Transfer the land to a trust that generates lifetime income for your client while also providing a tax deduction. 

• Conservation Easements: May be an effective way to fulfill charitable intentions with real estate but must be carefully constructed to avoid IRS scrutiny. Be aware of potential pitfalls and consult with experts in this area to ensure your client’s intentions align with their philanthropic goals. 

Keeping the Family Ties 

Gifting farmland or a ranch to the Foundation doesn’t mean severing ties with the family’s legacy. In fact, it can be an opportunity to extend the family’s values and traditions beyond the land itself. By working with the Foundation, your client can ensure that family members continue to play a role in advising the fund and recommending grants to charities that align with the family’s values.  

Case Study: The Paterson Family Legacy 

For generations, the Paterson family had operated a thriving farm in rural Southeast Texas. The farm was not just a source of income, but a symbol of family tradition and values. The Paterson’s were proud of their heritage and worked hard to maintain the land, pass down knowledge and skills to the next generation, and give back to their community. 

As the years went by, the farm became less viable, and the Paterson’s began to explore options for preserving their legacy. They met with an advisor who introduced them to the concept of gifting farmland to charity. The idea resonated with the family, as they wanted to ensure that their values and traditions continued to be honored. 

The Paterson’s decided to establish the Paterson Seedling Foundation upon gifting the farm to Greater Houston Community Foundation. A donor advised fund, was established, which would allow them to support charitable initiatives that aligned with their family’s values. They also wanted to involve multiple generations of family members in the decision-making process. 

To achieve this, the Paterson’s designated advisors to the fund from three generations of the family. These advisors can collectively recommend grants to charities that carry on the values held by the family. The advisors included:  

• John, the patriarch of the family, spent his entire life working on the farm. 

• Emily, John’s daughter, helped manage the farm operations and was passionate about sustainable agriculture. 

• Ben, Emily’s son is young and interested in farming but not full-time.

• Mary, John’s granddaughter, was studying agricultural business in college. 

The family worked together to recommend grants from the fund to charities that aligned with their values. Through their collective efforts, the Paterson family made a significant impact on their community. They supported programs that promoted sustainable agriculture, provided scholarships to young farmers, and helped entrepreneurs build successful farming operations. 

 “This is more than just a gift,” said Emily. “It’s a way for our family to leave a lasting impact on our community. We’re carrying on our values and traditions and involving all generations of our family in the process.” 

The case study presented in this blog is a fictionalized account of real-world scenarios, created for educational purposes only.

Sowing the Seeds of Legacy  

Gifting land to Greater Houston Community Foundation can be a powerful way for your clients to achieve their philanthropic goals while minimizing tax liabilities. By exploring multiple options for structuring a gift, your clients can ensure that their values and legacy are preserved for generations to come. As an advisor, you have a unique opportunity to help your clients unlock the full potential of their philanthropic endeavors—seize it! 

Contact Kevin Pickett to learn more about how your client can make a lasting impact in the community by gifting a piece of their family’s farmland.  

More Helpful Articles by Greater Houston Community Foundation:

• How to Start a Scholarship Fund
• The Importance of Charitable Giving in Financial and Estate Planning
• The Balance Between Recognition and Anonymity in Philanthropy: Which one’s for you? 
• Staying Ahead of the Curve: Legal Developments and Philanthropic Opportunities 
• Philanthropy Without Compromise: Elevating Philanthropy for High-Net-Worth Individuals and Families

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