Don’t Wait to Take Advantage of This Estate Planning Technique

Lock in discounts on family limited partnerships before it’s too late

For many years, family limited partnerships (FLPs) have been used to transfer property to family members at significant discounts, thereby saving estate and gift taxes. Those discounts may soon be going away.

Recently, there have been comments by IRS and Treasury officials indicating they are close to issuing proposed regulations to substantially reduce or eliminate discounts when valuing FLPs and other non-operating businesses for estate, gift tax and generation-skipping transfer tax purposes. The timing of the issuance of the regulations and their effective date are uncertain, but it could be as soon as a few weeks or months from today. What is certain is that time is of the essence.

It may be possible to take advantage of discounts before the regulations are issued. This could entail gifting or selling interests in an existing FLP to family members or to one or more trusts for their benefit. If you don’t already have a family limited partnership, you may still have enough time to create one and then gift or sell an interest in the FLP prior to the issuance of the regulations.

In short, here’s what you need to know:

• The IRS is expected to issue regulations disallowing valuation discounts for interests in closely-held, non-operating businesses that are transferred to a family member or trust.
• The elimination of the discounts could result in you or your estate incurring additional estate or gift taxes.
• It is rumored that the regulations will be issued this summer, perhaps as soon as a few weeks from now.
• It may be possible to lock in discounts by engaging in certain types of transactions prior to the issuance of the regulations.

Contact us to find out how you may be able to take advantage of this estate planning opportunity while it lasts. Kaufman Rossin’s estate and trust team has decades of experience helping clients to minimize estate and gift taxes and achieve their financial goals.