Preparing For New Guidelines For Family Limited Partnerships

In the next couple of weeks, the Internal Revenue Service is expected to issue new guidelines governing Family Limited Partnerships (FLPs). These guidelines can’t come soon enough. The new regulation is a positive step forward to ending the abuse of an investment vehicle that provides very significant benefits to families. 

What exactly is an FLP and how does it help families of significant wealth? 

An FLP is typically set up to promote the gifting of assets, via FLP interests, to children while allowing the parents to retain control of the assets. Here’s an example: Parents create an FLP and contribute to the FLP a business that they own. They then gift 98% of their Limited Partner interest to their children, and the parents retain a 2% General Partner interest. The Limited Partners, by definition, have zero control in running the FLP, and the General Partners have all the control. However, the Limited Partners own 98% of the value of the FLP, and the General Partners only own 2% of the value. 



Year-End Tax Planning: Just Do It – Now

 

High net worth individuals and families are typically smart about managing money, but things can go sideways when it comes to taxes.

Even after 25 years as a CPA, I’m continually surprised to see highly successful people waiting until just before April 15th to do anything with their prior year’s income taxes. At that point, it’s just too late for tax planning.  By putting off the task, taxpayers miss a number of golden opportunities to reduce taxes.The good news is that getting ahead of the curve is relatively easy: Simply reach out to your tax advisor and let them know of any big financial changes in your life or your business during the past year. The heads up will give your advisor time to start thinking about your next move before the end of the year, when you have far more ways to minimize taxes.