Family Limited Partnerships: Discounts, Options, and Disappearing Value

25 Pages Posted: 20 Aug 2008

See all articles by Karen C. Burke

Karen C. Burke

University of Florida Levin College of Law

Grayson M.P. McCouch

University of Florida Levin College of Law

Date Written: August 20, 2008

Abstract

Family partnerships have been become increasingly popular as a means of avoiding estate and gift taxes. As other estate freezing techniques have been closed off by statutory anti-abuse rules, estate planners have increasingly resorted to partnerships as a vehicle for transferring assets within a family at deeply discounted values. Discounts ranging from one-third to over one-half of the value of the underlying assets are routinely claimed, and often allowed, based on lack of marketability and lack of control, even where these disabilities have no lasting or ascertainable economic effect. Nevertheless, the use of family partnerships to suppress value for transfer tax purposes rests on shaky conceptual premises which deserve closer scrutiny.

Keywords: partnership, limited, family, FLP, estate tax, gift tax, valuation, discount, marketability, control, retained interest, transfer tax

JEL Classification: K34

Suggested Citation

Burke, Karen C. and McCouch, Grayson M.P., Family Limited Partnerships: Discounts, Options, and Disappearing Value (August 20, 2008). Florida Tax Review, Vol. 6, 2004, Available at SSRN: https://ssrn.com/abstract=1240011

Karen C. Burke (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

Grayson M.P. McCouch

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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