What is Family Limited Partnership (FLP) Planning?

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Typically, assets such as real estate, marketable securities or stock in privately held companies are contributed to FLPs structured with a small, general partnership interest and a large, limited partnership interest. These individuals then gift (or sell) the limited partnership interests to family members at a discounted value to accomplish their transfer goals.

Simultaneously, the senior owners maintain control over the assets through their general partnership interest. The discounted values generally reflect the limited partner's inability to control the underlying assets of the FLP and the illiquidity of the limited partnership interest. Unlike publicly traded securities, there is no readily available market for limited partnership interests, which further impairs the value of that interest.

The keys to estate planning success through the use of FLP's are:

• Retaining qualified, experienced legal counsel for design of appropriate partnership agreements.
• Retaining valuation expertise which is essential to compute, document and possibly to defend the discounts taken on these business interests. (The Internal Revenue Service considers the professional credentials and experience of the appraiser in determining which FLP valuations to challenge).
• Understanding that tax authorities consider the depth, breadth, and quality of the valuation report submitted in assessing their potential for challenge.

The valuation professionals at Strategic Valuation Group have extensive experience in valuing FLPs. We understand the importance of properly interpreting the complex legal provisions that exist in partnership agreements. Armed with this understanding, we connect how these specific provisions impact value through fact-based modeling coupled with a sound understanding of the market data that underlies discounts. The results are a well-reasoned and defendable comprehensive business valuation report that can withstand intense IRS scrutiny.

You can trust the full time, qualified, and highly credentialed business appraisers at Strategic Valuation Group to deliver FLP appraisals of the highest quality.