Family Business? You Might Flip For A FLP
- Posted in: Asset Protection
The Wall Street Journal says that family limited partnerships are finding renewed favor as an estate planning tool, thanks to recent tax-court decisions.
In an article entitled “Covering Your Assets” Journal writer Mark Klimek asserts that despite some IRS opposition, tax court rulings in recent years have endorsed the use of FLPs when they are used to preserve a family business for future generations.
“Setting up such a partnership could be especially useful right now for families with businesses,” according to the article. “The Obama budget calls for the estate tax to be restored next year at a rate of 45 percent for estates worth more than $3.5 million, or $7 million for couples. Income-tax increases for high earners are on the agenda as well.”
The article goes on to describe many of the dos and don’ts of FLPs, but of course each family’s situation is special, and you should consult an estate planning attorney before making decisions about any specific strategy.
In any case, the time to act is now. According to one expert quoted in the Journal article, “There's a realization that any kind of estate planning you can do this year is good, because 2009 will probably end up being the most favorable year for taxes ever."