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Estate planners flip for family limited partnerships.

Article Excerpt
THE FAMILY LIMITED PARTNERSHIP has proven itself an extremely valuable tool for both business and estate planning. What other tool can ease or even eliminate the tax bite often associated with transferring the metal center business--or its income--to family members, all the while keeping the owner's current tax bills to a minimum?

Transferring assets or income-producing property to children or other family members can be an invaluable tax planning and tax-reducing tool. Income can be shifted to an individual in a lower tax bracket than the donor. What's more, under our tax rules, the transfer of an interest in a partnership can represent a future increase in value. In other words, the legitimate deferral of taxable gain.

Unfortunately, since 1997, the Internal Revenue Service has been waging war over the estate and gift tax consequences of family limited partnerships or FLPs. Initially, the IRS was unsuccessful in attacking these entities and their tax benefits. Recently, however, the IRS has achieved some success in the courts, situations that were reviewed by the appellate courts with mixed results. However, because of its significant tax and non-tax advantages, the FLP remains a popular entity, one that every metal center owner should consider. Naturally, the advice of a competent adviser should be sought, if only to avoid doing battle with the...

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