FLP discounts: Alive and well — if planning and operation are proper

Description

Abstract: The family limited partnership (FLP) can be a powerful tool for consolidating and managing family wealth while reducing gift and estate taxes, in part through valuation discounts. And recent court cases demonstrate that a properly planned and operated FLP can support substantial valuation discounts for transfer tax purposes. This article examines one such case, in which the court upheld 47.5% valuation discounts for FLP interests even though the decedent’s estate plan was incomplete at the time of her death. A sidebar explains how experts quantify valuation discounts. Keller v. United States, No. 10-41311 (5th Cir. 9/25/2012) Estate of Liljestrand v. Commissioner, T.C. Memo 2011-259 (11/09/2011)