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Navigating IRC Section 2036(a)(2) in family limited partnerships

18 Min Read
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“Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful ...”

—F. Scott Fitzgerald, “The Rich Boy” (1926, emphasis added)

 

In creating and administering family limited partnerships (FLPs) and family limited liability companies (LLCs), clients and estate planners share a common aim: the orderly management and tax-efficient transition of wealth to future generations. A pervasive tension threatens this noble goal: Clients are reluctant to yield control, particularly if an FLP holds an operating business, while estate planners prefer to sever all ties out of fear that Internal Revenue Code Section 2036...

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About the Authors

Chanie S. Fortgang

Chanie S. Fortgang is an attorney in the Private Wealth Services group of Holland & Knight LLP in New York City.

 

 

Christine Quigley

PARTNER AND PRIVATE CLIENTS, TRUSTS & ESTATES PRACTICE LEADER, ArentFox Schiff

https://www.afslaw.com/attorneys/christine-quigley

Christine Quigley advises affluent individuals and families in wealth planning, tax planning, estate and trust administration, and business succession planning. Her clients include successful business owners, private equity and hedge fund principals, and executives of public and privately-held companies.

Ms. Quigley's practice focuses on the needs of the ultra high net worth. She acts as a trusted advisor, providing tailored technical solutions coupled with the support required to manage wealth through the generations. Her relationship-driven approach allows her to translate clients' priorities and family dynamics into successful long term plans.

At its core, any sophisticated wealth planning practice demands a thorough knowledge of transfer tax law. Through the use of advanced planning vehicles, including family partnerships, estate "freeze" transactions, grantor retained annuity trusts and other planning vehicles, Ms. Quigley assists clients in transferring wealth to successive generations while realizing significant tax savings. In addition, she has extensive experience in asset protection, implementing lifetime gifting strategies and transferring closely held business interests.

Ms. Quigley regularly represents entrepreneurial clients who have built tremendous wealth from the ground up. She counsels her clients in achieving social and philanthropic goals and educating younger generations on the stewardship of wealth. Ms. Quigley is one of few attorneys who has successfully implemented family constitutions and governance structures connecting trusts, family foundations and family enterprises in a way that mentors and maintains a cohesive social vision.