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Consider an FLP in Your Client’s Estate PlanClients are restricted as to the amount they are able to transfer that will be exempt from gift tax as a result of the minimal gift tax annual exclusion and the limited gift tax credit. These limitations have led planners to seek techniques that result in leveraged gifting. The ability to transfer assets of a higher net asset value than that assessed for transfer tax purposes is advantageous in a tax system with limited credits, exclusions, and a graduated tax rate. A technique that has developed and proved largely successful is the family limited partnership (FLP). Estate planners saw the significance of discounts applied to closely held family businesses for gift and estate tax valuation purposes and determined that the concepts which resulted in discounts for purposes of valuing these entity interests could have equal applicability in nonoperating entities. In addition, these entities have worked effectively to accomplish other, non-tax, goals of clients, such as protection from creditors, restrictions against transfers, and consolidation of wealth for management. As with most planning opportunities, a technique with expansive applicability and valuable uses is also susceptible to misuse, which can be costly. As this technique is used with more frequency and has been developed, cases and authority provide additional guidance on the issues arising from the use of FLPs that are subject to challenge. More information about the book The Family Limited Partnership Deskbook, Second Edition Related CLE Estate Tax Implications for FLPs is the perfect companion to The Family Limited Partnership Deskbook. This audio CD program covers the current status of gift and estate tax treatment of family limited partnerships with an expert panel that examines other emerging issues in the field. By Hugh F. Drake, William S. Forsberg, Stephanie Loomis-Price,
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