Reports about the demise of family limited partnerships (FLPs) are greatly exaggerated.
As long as you structure an FLP correctly, it still remains the perfect vehicle to avoid income taxes and estate taxes on your business interests while offering protection from creditors. Also, an FLP can help you shift family-business ownership to the next generation at a discounted value.
But a recent Wall Street Journal story said some estate planners are shying away from FLPs. A recent Tax Court decision mandates that FLP deals should now include more bells and whistles. But that doesn't make FLPs unattractive or unworkable. In fact, the required bells and whistles can actually make the FLP even more effective.
The key point: For your FLP to withstand the new scrutiny, you can't maintain too much control over the assets transferred to the partnership. Create it, and run it like a real partnership, not as your private pigg...(register to read more)