Ask the Experts!
The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers. Here’s the question of the day.
Question: How can my client terminate his family limited partnership (FLP)?
Answer: FLPs have been very popular over the past 30 years or so as a strategy to accomplish multiple estate planning objectives, including
- Liability management,
- Asset management,
- Family gift facilitation and
- Estate tax reduction.
With substantially higher federal estate tax exemptions now made permanent, some who created FLPs primarily to avoid estate taxes may now be interested in dismantling them.
In general, FLPs are created with paperwork between the partners, and some paperwork also filed with the relevant state government and the IRS. Terminating an FLP usually requires the same sort of paperwork—documents between the partners, termination paperwork with the state government and notice to the IRS.
Clients should check with a local attorney, often the same one who helped set up the FLP, for more specific information.
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