Karen C. Burke (San Diego) & Grayson M.P. McCouch (San Diego) have published Family Limited Partnerships: Discounts, Options, and Disappearing Value, 6 Fla. Tax Rev. 649 (2004). Here is the Introduction:
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 that deserve closer scrutiny.
One response to “Burke & McCouch on Family Limited Partnerships and Disappearing Value”
Query: What happens when members of the family sharing in the family partnership have disputes and themselves? How are valuation issues addressed in such disputes? Gifts of fractional interests are valued with various discounts for gift tax purposes. Devises or bequests of fractional interests are not for estate tax purposes. But what happens when common law principles are applied in civil case disputes?