1 How to Save Time & Taxes Handling Estates § 7.04

Summary

• [1] Family Limited Partnerships, In General

  The family limited partnership has gained popularity among estate planners as an effective estate planning tool. If properly formed and operated in a manner to avoid adverse gift or estate tax treatment, the family limited partnership can provide substantial wealth transfer tax savings. In addition, family limited partnerships can achieve other non-tax objectives of clients, including control and management of family assets, and protection from creditors. Partners contribute assets to the limited partnership and receive in return general and limited partnership interests. The limited partnership interests, after taking into account minority and lack of marketability discounts, are generally worth substantially less than the assets contributed to the partnership. The donor/decedent achieves tax savings essentially equal to the transfer tax saved with respect to the amount of the discount.

  The Service’s attack and the taxpayer’s response to the ...