family limited partnership

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family limited partnership (FLP)

A special type of limited partnership recognized by some states as an estate planning tool. A donor establishes a family limited partnership and then transfers into it property expected to appreciate in value over the years. The donor then makes gifts of small percentages of the partnership to children or other family members. The gifts are small enough to escape gift taxes and may be doubled if the donor makes the first gift to the spouse, and then each of them makes gifts each year.As the property grows in value,the appreciation belongs to the person receiving the gifted shares and so is not in the donor's estate at death.

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Generally, the following assets are fine to contribute to an FLP that may include but would not be limited to:
When the owner is ready to divest from the original company, the FLP sells the shares to the ESOP and reinvests the proceeds in qualified replacement property to take advantage of the Sec.
To preserve valuation discounts and keep FLP assets out of the estate, the estate must show that either 1) the assets were transferred in a bona fide sale for adequate and full consideration in money or something with monetary value, such as shares in a business, or 2 the deceased didn't retain possession or enjoyment of or the right to income from the transferred assets.
Before the court brought the FLP assets back into the decedent's estate, the estate did not owe any taxes because of the pecuniary marital bequest formula provision included in the decedent's will.
Transdel has implemented a focused approach in negotiating with pharmaceutical companies with a strategic interest in pain management and the requisite infrastructure to successfully commercialize Ketotransdel(R)," stated Terry Nida, Principal of FLP Pharma.
The FLP agreement provided that Karen and her sister, Sigrid, would be both general and limited partners.
In all cases there is never an express reservation of the "possession or enjoyment of, or the right to the income from" the property contributed to an FLP.
In the case of a family ranch, for example, the senior generation could place that real estate in an FLP in which partners waive the right to transfer interest outside the family, cede day-to-day control to the general partners, and are bound to arbitration in the case of conflict," explains Lee Garsson, a senior vice president at Bank of America.
Due to certain restrictions placed on FLP units, appraisers will usually value the units at somewhere between 50 percent and 70 percent of the value of the FLP's underlying assets.
The election was an attempt to reestablish democracy in Fiji following the 2000 coup that ousted the government of FLP leader Mahendra Chaudhry.
Qarase campaigned on a platform of affirmative action for indigenous Fijians, who make up around 51% of the population, and has said he would prefer the Indian-dominated FLP not accept a position in cabinet.