After receiving notice that your organization has been named a beneficiary of an estate, be sure to follow up with the attorney for the estate and request a copy of the will or trust. Real estate bequests can often be the trickiest bequests for an organization to handle. When the bequest is a farm, additional unique concerns may arise.  For example, farmland may involve environmental concerns. Many farms have or once had underground storage tanks for fuel. In order to avoid any liability for environmental issues, it is essential for beneficiaries of farm bequests to investigate the presence or absence of these tanks, as well as how the prior owner kept and stored other chemicals, like pesticides, on the property. Hiring someone to perform a phase one environmental audit of the property is a step in the right direction.

Your nonprofit should hire an attorney to perform a 60-year title search on the real estate. The title search can provide your organization with valuable information to help make your decision to accept or disclaim the bequest. First, the title search will allow your nonprofit to determine if there are any liens, judgments, or mortgages on the property that could cause difficulties down the road.  Second, you will discover whether a conservation easement was placed on the farm. This agricultural preservation easement affects how your organization can use the property. The title search will also disclose whether the farm was enrolled in the Clean and Green Preferential Tax program. "Clean and Green" offers farm owners significant tax savings, but it restricts the ability to subdivide and sell the land. It is crucial for your organization to determine if the devised property was enrolled in the program because there could be huge tax consequences if program rules are violated.

Another issue to consider is whether there are any written or oral hunting agreements on the property that could affect your use of the land. Further, did the estate or decedent lease out the crop land for others to farm and harvest? It would be wise to obtain copies of any such agreements before moving forward with the bequest. Remember, every estate and situation is different, so be sure to contact your own counsel when you are the beneficiary of a farm.

 

Kristen McGuire, J. D. 

Stock and Leader, Attorneys at Law