Make sure your Family Limited Partnership (FLP) is set up correctly

By | March 29, 2009
The IRS cracked down on another FLP set up by a families estate. These Estate Planning tools can be very powerful to reduce estate taxes and pass your hard earned wealth to the next generation, but only if set up correctly by experienced Estate Planning Advisers.
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Estate of Jorgensen v. Commissioner: IRS wins another Family Limited Partnership Case due to the Taxpayer Doing Everything Wrong

Yesterday, the US Tax Court’s issued its opinion in Estate of Jorgensen v. Commissioner, ruling that the entirety of assets transferred to a family limited partnership were included in the gross estate of a decedent under s. 2036(a)(1) of the Internal Revenue Code.

The Decedent, Mrs. Erma Jorgensen, died on April 25, 2002.  Her late husband was Colonel Jorgensen; her daughter was Jerry Lou and her son was Gerald.  During their lives, the Colonel was responsible for managing the family’s investments.  He was actively involved in picking stocks, managing the family’s money, and engaging in their estate planning

After his death, the Jorgensens’ estate planning attorney, who Mrs. Jorgensen had little contact with during her husband’s life, advised Mrs. Jorgensen to transfer her brokerage accounts to the FLP.  The attorney wrote to her in a letter: 


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