Exploring Land Use Tax Benefits and Estate Planning Strategies for Wealthy Kendall County Families with Ranchland
It is no secret that Kendall County has some pretty wealthy families living here. We have a heart for community, preservation, and our values are as timeless as the setting sun. Unfortunately, it is also not a secret to the rest of the United States, and so many families are making this their new home, pushing up land values, and crowding out once beautiful tracts with new developments. This article has the wealthy land owner in mind, who may want to consider certain estate planning techniques, and also a light touch on the difference between Wildlife Exemptions and Agricultural Exemptions for our new neighbors coming in from out of State. We hope you find this useful!
Kendall County, TX, offers landowners valuable avenues for tax relief through Wildlife Exemptions and Agricultural Exemptions. Understanding the differences and benefits of these exemptions is crucial for landowners seeking to optimize their land use and tax strategies. Many times, these exemptions are misunderstood, mismanaged, and can create a sense of confusion for wealthy families who seek to maximize their land use while taking advantage of tax savings. Crestmont Private Wealth does not provide legal advice and is not a land expert, we are a Registered Investment Advisor that works with wealthy and high-earning clients, developing a comprehensive wealth management plan. For specific guidance, consult your attorney, CPA, or the county office in Kendall. Your situation and current law may differ from the time of publishing.
Let’s first discuss the two types of exemptions that are common to the area. One is a Wildlife Exemption, and the other is an Agricultural Exemption.
Wildlife Exemptions – Definition and Requirements
Wildlife Exemptions are designed to encourage landowners to manage their property for the benefit of native wildlife species. To qualify, landowners must actively manage their land according to a wildlife management plan approved by the Texas Parks and Wildlife Department. This includes activities such as habitat enhancement, controlling invasive species, and providing supplemental food or water sources. We have seen acreage as low as 5 acres qualify for this requirement, which would accompany an Annual Report every two (2) years, and a Wildlife Management Plan report every five (5) years. For current and specific details, contact the county office and arrange an appointment to speak with them. We have found the local office to be very friendly, open, and educational!
Benefits
The primary benefit of Wildlife Exemptions is the reduction in property taxes. By shifting the land use from traditional agriculture to wildlife management, landowners can maintain lower tax rates. Additionally, these exemptions promote biodiversity, enhance ecosystem services, and provide opportunities for landowners to engage in conservation efforts that benefit local wildlife populations. When we think about promoting the long-term benefits of our beloved Hill Country, this is a mutual benefit for the future generation and encourages the right thing, in our humble opinion.
Agricultural Exemptions – Definition and Requirements
Agricultural Exemptions are granted to landowners who use their property for farming, ranching, or other agricultural activities. To qualify, the land must be actively devoted to agricultural production for purposes such as crop cultivation, livestock grazing, or timber harvesting. The land must meet specific use intensity and history criteria defined by the Texas Comptroller’s Office, and typically, we see 10 acres as a minimum starting point.
Benefits
Agricultural Exemptions also offer significant property tax reductions. These exemptions support the local agricultural economy, ensure the continuation of farming traditions, and promote sustainable land management practices. Agricultural activities also contribute to food security and provide economic benefits to the community.
Comparing Wildlife and Agricultural Exemptions
While both Wildlife and Agricultural Exemptions provide property tax relief, they serve different purposes and require distinct management practices. Wildlife Exemptions focus on conservation and biodiversity, while Agricultural Exemptions emphasize food production and agricultural sustainability. Landowners should carefully consider their land use goals, management capabilities, and long-term objectives when choosing between these exemptions.
What if I Have My Homestead on the Site?
Typically, the appraisal office will appraise the 1 acre where your home is contained to be non-exempt as defined by the Ag or Wildlife exemption, meaning that it will get the “typical” tax rate and valuation. Your home will also be taxed at the normal rates, but you may qualify for a homestead exemption. However, the remaining land outside that acre boundary should remain exempt as defined in this article as long as you keep up with the reporting and spirit of the rules. This allows homeowners to essentially be “on-site” operators of the exemption, which we all know can be a big benefit to the intent of the Wildlife or Agricultural ecological purpose.
Conservation Easements for Estate Planning
Some families who own large tracts of land (usually 100 acres plus) consider ways to preserve their land for future generations, shield it from development, and ease their Estate Tax Burden. As of the time of this publication in June 2025, the estate tax is 13.99 million per individual and 27.98 million per married couple. As we think about the increasing values of property in Kendall County and the desire for families to pass this land down generations, it is crucial for them to consider every legal angle possible within the tax code to get their property down the bloodline in trust. This is, of course, if that is their intent and desire. Shrinking the value of the estate is one way to do so, to get the property under the allowable exemption levels, and provide an avenue for gifting this discounted value to generation two. Conservation easements are one method of many to do so. These are legal agreements that limit land use to protect its conservation values. These easements can be a valuable tool for estate planning, especially for landowners with significant assets. By placing a conservation easement on their property, landowners can reduce the taxable value of their estate, potentially lowering estate taxes. Conservation easements also ensure the long-term preservation of the land’s ecological and open space values, benefiting future generations. In Kendall County, this can be a valuable tax benefit and preservation benefit for wealthy landowners interested in preservation and passage of wealth to the next generation, keeping the family ranch in the family.
Using Family Limited Partnerships for Estate Planning
Family Limited Partnerships (FLPs) offer another strategic approach for estate planning, particularly for landowners with assets exceeding the US Estate Tax Exemption threshold, as mentioned previously. FLPs allow landowners to transfer ownership of their property to a partnership where family members hold limited partnership units. Because LP units are illiquid, the IRS does allow discounting to these units because they are not immediately transferable on an exchange or open market. Over time, landowners can gift these units to family members under the annual exclusion gift limits (currently $19,000 per individual in 2025), effectively reducing the taxable value of their ultimate estate. With a well-designed and executed estate plan over time, this can significantly reduce the exposure to potential estate taxes.
Benefits of FLPs
The benefits of holding ranch property within an FLP include:
- Control and Management: Landowners can retain control over the property while gradually transferring ownership to family members.
- Tax Advantages: Gifting FLP units can reduce the taxable value of the estate, potentially avoiding estate taxes.
- Asset Protection: FLPs can offer some limited protection on the property from creditors and provide stability for future generations.
- Family Legacy: FLPs ensure that the property remains within the family, preserving its legacy and value.
Wildlife and Agricultural Exemptions in Kendall County, TX, offer valuable tax benefits and promote sustainable land management practices. Landowners should choose the exemption that aligns with their goals and capabilities. Additionally, conservation easements and Family Limited Partnerships provide effective estate planning strategies for landowners with significant assets. By utilizing these tools, landowners can optimize their tax liabilities, protect their property’s conservation values, and ensure a lasting legacy for future generations. When we think about these various techniques, these are just a handful of options available to the wealthy landowner. By utilizing a fiduciary wealth advisor, a CPA, and an Estate Attorney, one can design a comprehensive plan that may suit the needs of future generations to enjoy our beautiful Hill Country and help it stay preserved for generations to come.
Disclaimer: “Investment advisory services are offered through Crestmont Private Wealth LLC, a Registered Investment Advisor. Investments through Crestmont Private Wealth LLC are: NOT FDIC INSURED, NOT BANK GUARANTEED, MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPAL, NOT INSURED BY ANY STATE OR FEDERAL AGENCY. Crestmont Private Wealth is not a CPA firm, and not a legal practice, and this article should be construed as tax advice or legal advice.”
