Should an FLP be dissolved due to changes in estate taxes?

Should an FLP be dissolved due to changes in estate taxes?

by Julie Jason on Oct 4, 2018

Wealthy families that set up family limited partnerships (FLP) years ago as an estate tax planning tool may be wondering if that move needs to be reconsidered.

As a result of the increased federal exemption amount ($11.18 million) that went into effect in 2018, fewer estates will be subject to federal estate taxes. It’s estimated that only 1,800 estates will be subject to estate taxes this year, down from 5,000 in 2017 and 52,000 in 2000, when the exemption was $675,000, according to Forbes’ Ashlea Ebeling, sourcing the Joint Committee on Taxation.

Should you undo an FLP? Perhaps; perhaps not. One thing is for sure: Anytime your goals change, revisit your planning. And if you’re dealing with an FLP, call in the experts before taking any action.

“This is a complicated area of the law, not for a practitioner new to FLPs,” explained tax attorney Marissa Dungey, partner with Withers Bergman LLP. “There are pitfalls if you move forward without proper advice.”

Look for my column on this topic in a newspaper near you. If your paper does not carry the column, ask your local editor to contact King Features.

Want to learn more about estate planning topics like Power of Attorney, leaving a legacy, finding the right lawyer, etc? Section 10 of my new book Retire Securely: Insights on Money Management from an Award-Winning Financial Columnist entitled ‘Estate Planning’ will help.