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Traditional Limited Partnerships

Traditional Limited Partnerships are...	Traditional Limited Partnerships have been OVER-MARKETED as wealth transfer devises. Family Partnerships are RED FLAGS for the Internal Revenue Service for abusive tax-free WEALTH TRANSFERS. General Partners of Family Partnerships are exposed to frivolous lawsuits, court judgments, and creditor seizures. The problem is avoided if the FAMILY, LLC™ is the General Partner of your Family Limited Partnership or the Family, LLC is substituted for the partnership.
How assets are transferred amongst family members	Family partnerships have been widely over marketed as the "devise of choice" for transferring the "family business" and other highly appreciated assets tax-free from parents to their children. How it works: The older generation (parents) become 2% owners as "general partners" in a Family Limited Partnership. Over a period of time, by "gifting" limited partnership interests, the younger generation (children) become the 98% "limited partners." End result:  Highly appreciated assets are effectively transferred from the estate of the "parents"  taxable @ 55% to the "children " tax-free. When carefully and properly implemented, it’s a wonderful / wonderful tax deferral strategy.  BUT, there's a better way. The IRS considers these arrangements "abusive" when overzealous practitioners "over-claim" two commonly used discounts in the valuation of underlying (highly appreciated) assets in Estate Tax Valuations. The IRS comes down significantly hard when these arrangements are made over a "death bed." The two valuations are: (1) Lack of marketability discounting, typically 15% to 30% due to a limited market for the business or the assets. (2) Limited minority interest discounting, typically an additional 15% to 30% due to the minority position in the business or underlying assets. Combined, these two discounts can amount up to 60%. How much, is too much? NEVER-THE-LESS, if discounting is reasonably and carefully applied, it’s a significant tax saving devise.
The problem with limited partnerships	The disadvantages: (1) Gifted property does NOT receive the "stepped-up" basis treatment that bequeathed property receives. Therefore the children, who have received "gifted partnership interests" may face unexpected capital gains tax liability. (2) General Partners are not insulated from potential lawsuits, judgments, or creditor seizures. This problem can be avoided if the General Partner is The ULTRA TRUST® or the FAMILY, LLC™ is used, in lieu of the Family Limited Partnership. If you have an interest in FAMILY BUSINESS SUCCESSION PLANNING, please contact us, there are several available devises addressing the following important issues: Ownership.  Which of the FAMILY members will become the future owners of the business? What plan or combination of plans is the most effective in consideration of asset/wealth preservation, elimination of probate, deferral of capital gains taxes, elimination of estate taxes, and reduction of earned income taxes. Control.  Which of the FAMILY members will become the future managers. Not all FAMILY members have management skills. Some FAMILY members should have voting control, while others must become silent partners. Dispute resolution.  How will FAMILY members deal with potential disputes? What mechanism is fair to controlling and non-controlling FAMILY members. Employment.  Which FAMILY members will be employed by the business?
Better asset protection/wealth preservation       What's a Trust?	We have a number of asset protection devises, wealth preservation strategies, elimination of probate, elimination of estate taxes, and plans for deferring possibly reducing your income taxes. The ULTRA TRUST®  meticulously crafted to hold your personal residence and all your other valuable assets with NO downside to your personal income tax return, form 1040. The MEDALLION TRUST® designed to take advantage of your Gift Tax / Unified Estate Tax Credit LOOPHOLE. The VERTEX TRUST® for your deferral of Capital Gains Taxes, elimination of probate and all inheritance taxes while insulating you from potential frivolous lawsuits. The Foreign Deferred Compensation Plan defers "earned income" taxes on W-2 income or other (((income streams))) rents, commissions, royalties, etc. The Foreign Private Bank  properly capitalized, "class A" foreign bank is the equivalent to Fleet, BankBoston, BankAmerica. Anything that they can do, your Class A Foreign Bank can do. Practically a license to printing your own money. Not available to IRS defined US Persons.

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Estate Street Partners, LLC
71 Commercial Street #150
Boston, MA 02109
508-429-0011 / Fax: 508-429-3034
RBeatrice@PrivateWealth.com