Transition to Community Ownership

A current farmer can get a measure of assurance that their farmland will be used for agricultural purposes into the future by transferring ownership to a trust, whether by sale, gift, or will. Holding land in trust can provide security and stability to a farm business and entering farmer without the entering farmer assuming ownership of the land. A trust is legally required to use the land according to the rules set out when the trust is established. 

A trust is a legal arrangement where one party (the settlor, in this case the current farmer/landholder) transfers property to a second party (the trustee) for the benefit of someone (the beneficiary, in this case the entering farmer, and/or the farm business). Under this arrangement, the trustee has legal ownership over the property, while the beneficiary is the “beneficial owner.” A land trust is essentially a not-for-profit trust established for the purpose of holding land. 

  • A trust can be non-charitable, or charitable, with different implications.
  • A trust can be created to hold a specific property, or the property can be transferred to an existing trust whose mandate matches the vision and mission of the farm owner. 
  • Donating land isn’t required to put it into trust, though for current farmers whose primary vision is to preserve the land for agriculture, and whose financial needs do not require profit from a sale, donating land to a trust can be an excellent way to to meet the current farmer’s goals. 
  • A trust can include provisions for the current farmer’s personal vision around continued access to the land for themselves and their family. 
  • Putting farmland into a trust usually doesn’t include the farm’s machinery, equipment, livestock, and inventory, unless specified.
  • When a farm business is incorporated and shares are transferred to a trust, the trust effectively owns all the farm’s assets, including land, machinery, equipment, livestock, and inventory.
  • A trust is treated as a distinct individual for taxation purposes.
  • Transferring ownership to a trust with charitable status may provide tax benefits.
  • Putting land into a trust can include provisions for the current owners to continue to live on or use the farmland, through a lease or life estate.
  • Rules governing non-charitable trusts require a “disposition” of trust every 21 years, which will trigger capital gains taxes. Charitable trusts are tax-exempt.
  • It’s important to include a “gift-over,” which outlines what happens if the beneficiary dies.
  • Considerations around probate fees, capital gains, and other tax law surrounding trusts are complex and require the expertise of a lawyer well versed in trusts and tax law.


  • The landholder wants to prioritize farmland preservation over financial benefit.
  • There is an existing community organization with the capacity to hold land in trust.
  • There is widespread community support to allow for potential fundraising.
  • The entering farmers don’t need or want to own land, or can’t afford to buy land.
Read Case Story: Putting Farmland Into Trust – Madrona Farm (link opens in new tab)
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