Normal FLP structure for estate tax planning; modifying it to amplify the extent to which it can help add a hurdle between valuable assets and some future (not currently in existence) creditor if properly aged (4 - 7 years before there is a problem) and if it has a business purpose; important points in the event of an estate tax audit, e.g., separate counsel for the children's trust; problem of timing of the funding of the assets to the FLP versus timing of the gift of LP interests; problem of the change of California's LLC act effective 1/1/14; use of FLPs with captive insurance companies, pensions, life insurance and as an alternative to an ILIT.

1. Family Limited Partnerships
FLP For Estate Tax Planning
Givner Heirs’
Trust #1
Givner
Family
Trust
Givner
Properties,
Inc.
Givner
Heirs’ Trust
#2
1%
LP
97%
LP
2%
GP
Givner Enterprises, L.P.
Bldg. #1
Bldg. #2
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
1

2. Family Limited Partnerships
FLP With Collateral Protection (LLCs)
Givner Heirs’
Trust #1
Givner
Family
Trust
Givner
Properties,
Inc.
1%
LP
97%
LP
2%
GP
Layering ➜
Givner
Heirs’ Trust
#2
Givner Enterprises, L.P.
LLC
Bldg. #1
LLC Bldg.
#2
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
2

3. Family Limited Partnerships
FLP With Stand‐by Foreign Trust [additional layering]
Givner Heirs’
Trust #1
BKG
Trust
Layering ➜
Givner
Heirs’ Trust
#2
(NZ)
Givner
Properties,
Inc.
2%
GP
Layering ➜
1%
LP
97%
LP
Givner Enterprises, L.P.
LLC
Bldg. #1
LLC Bldg.
#2
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
3

4. Family Limited Partnerships
FLP Which Establishes A Foreign Trust [additional layering]
Givner Enterprises, L.P.
Layering
Liquid
LLC Bldg.
#2
assets
LLC
Bldg. #1
BKG
Trust
(NZ)
Nevis
LLC
Layering
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
4

5. Family Limited Partnerships
FLP With Collateral Protection (LLCs)
Givner Heirs’
Trust #1
Givner
Family
Trust
Givner
Properties,
Inc.
2%
GP
Layering with
Nevada
Entities
Givner
Heirs’ Trust
#2
1%
LP
97%
LP
Givner Enterprises, L.P.
Nevada LLC
Bldg. #1
Nevada LLC
Bldg. #2
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
5

6. Family Limited Partnerships
FLP With Nevada SSST Establishes Foreign SSST
New Zealand
SSST
Step 2:
Capitalizes with
Nevada
SSST
liquid assets
Step 1:
97% LP
Step 3:
100%
Member
Givner Enterprises, L.P.
Step 4:
Nevis LLC
Loans money
Nevada LLC
Bldg.
Givner & Kaye,
A Professional Corporation
Owen@GivnerKaye.com
6

7. LAW OFFICES
BRUCE GIVNER
(bruce@GivnerKaye.com)
OWEN D. KAYE
( o we n @ G i v n e r K a y e . c o m )
KATHLEEN GIVNER
(kathy@GivnerKaye.com)
NEDA BARKHORDAR
(neda@GivnerKaye.com)
GIVNER & KAYE
A PROFESSIONAL CORPORATION
SUITE 445
12100 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90025
www.GivnerKaye.com
www.MajorTaxProblems.com
PHON E
(3 10) 207 -8 008
(8 18) 785 -7 579
F AX
(3 10) 207 -8 708
(8 18) 785 -3 027
February 6, 2014
Family Limited Partnerships
1.
Audits.
1.1. IRS Form 706. Question 11a: “Did the decedent, at the time of death, own any
interest in a partnership (for example, a family limited partnership), an unincorporated
business, or a limited liability company; or own any stock in an inactive or closely held
corporation?
11b: “If `Yes,’ was the value of any interest owned (from above) discounted on
this estate tax return? If `Yes,’ see the instructions on reporting the total accumulated or
effective discounts taken on Schedule F or G.”
Instructions, page 26: “Valuation discounts. If you answers `Yes,’ to Part 4 –
General Information, line 11b for any interest in a partnership, an unincorporated business, a
limited liability company, or stock in a closely-held corporation, attach a statement that lists
the item number from Schedule F [Other Miscellaneous Property] and identifies the total
effective discount taken (that is, XX.XX%) on such interest. Example of effective discount:
a
Pro-rata value of limited liability company
(before any discounts)
$100.00
b
Minus: 10% discounts for lack of control
( 10.00)
c
Marketable minority interest value (as if
freely traded minority interest value)
$ 90.00
d
Minus: 15% discount for lack of marketability
(13.50)
e
Non-marketable minority interest value
$76.50
Calculation of effective discount:
(a minus e) divided by a = effective discount
$100.00 - $76.50 ÷ $100.00 = 23.50%
If you answer `Yes,’ to line 11b for any transfer(s) described in (1) through (5) in the
Schedule G [Transfers During Decedent’s Life] instructions (and made by the decedent,

8. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
Family Limited Partnerships
February 6, 2014
Page 2 of 5
attach a statement to Schedule G which lists the item number from that schedule an
identifies the total effective discount taken (that is, XX.XX%) on such transfer(s).”
1.2.
Privilege.
1.3.
Separate Counsel. For Children or Children’s Trust Trustee.
1.3.1. E&O coverage for trustee.
1.3.2. Evidence of negotiation.
1.4.
Independent Third Parties, e.g., charity.
1.5. Timing Of Funding. Senda, 8th Cir. 2006: no evidence that parents contributed
the stock to the partnership before they transferred the partnership interests to the children,
therefore they were gifts of stock. Taxpayers must avoid the reality and appearance of an
integrated transaction (step-transaction doctrine).
1.6. Gifts Of Present Interests? Wimmer, TC (6/4/12): to satisfy the criteria for a
present interest under §2503(b), must prove (1) the partnership would generate income, (2)
some portion of it would flow steadily to the donees, and (3) that portion of income could be
readily ascertained. Cure: give the donee of the LP units the right, upon receipt of the
interest and for a reasonable time thereafter, to require the partnership or the donor to buy
back the donee’s units that were the subject of the gift. Similar to a Crummey notice.
1.7.
Parents As Officers Of Corporate GP.
1.8.
Annual GP Report.
1.9.
Tax Returns vs. Corporate Records.
1.10. Texas Isn’t Actually Part Of The United States. Keller v. U.S., failure to fund
the FLP before death was held OK because, under Texas law, her intent governed and the
estate’s payment of the estate tax was retroactively characterized as a loan to the partnership
thus entitling the estate to the deduction for interest incurred!!
2.
Creditor Protection.
2.1.
Change in LLCs. Effective 1/1/14 new 17705.03(c) vs. old 17302(c).
2.2.
Revised ULPA:
California Corporations Code §15907.02.
(a)
A transfer, in whole or in part, of a partner's transferable interest:

9. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
Family Limited Partnerships
February 6, 2014
Page 3 of 5
(1)
is permissible;
(2)
does not by itself cause the partner's dissociation or a
dissolution and winding up of the limited partnership's activities; and
(3)
does not, as against the other partners or the limited
partnership, entitle the transferee to participate in the management or conduct
of the limited partnership's activities, to require access to information
concerning the limited partnership's transactions except as otherwise provided
in subdivision (c), or to inspect or copy the required information or the limited
partnership's other records or to exercise any other rights or powers of a
partner.
(b)
A transferee has a right to receive, in accordance with the transfer,
distributions to which the transferor would otherwise be entitled.
(c)
A transferee is entitled to an account of the limited partnership's
transactions only upon the dissolution and winding up of the limited partnership.
(d)
Upon transfer, the transferor retains the rights of a partner other than
the interest in distributions transferred and retains all duties and obligations of a
partner.
(e)
A limited partnership need not give effect to a transferee's rights under
this section until the limited partnership has notice of the transfer.
(f)
A transfer of a partner's transferable interest in the limited partnership
in violation of a restriction on transfer contained in the partnership agreement is
ineffective as to a person having notice of the restriction at the time of transfer.
(g)
A transferee that becomes a partner with respect to a transferable
interest is liable for the transferor's obligations under §§15905.02 and
15905.09. However, the transferee is not obligated for liabilities unknown to the
transferee at the time the transferee became a partner.
(h)
A transferee of a partnership interest, including a transferee of a
general partner, may become a limited partner if and to the extent that (1) the
partnership agreement provides or (2) all general partners and a majority in
interest of the limited partners consent.
15907.03
(a)
On application to a court of competent jurisdiction by any judgment
creditor of a partner or transferee, the court may charge the transferable
interest of the judgment debtor with payment of the unsatisfied amount of the
judgment with interest. To the extent so charged, the judgment creditor has
only the rights of a transferee. The court may appoint a receiver of the share of
the distributions due or to become due to the judgment debtor in respect of the
limited partnership and make all other orders, directions, accounts, and
inquiries the judgment debtor might have made or which the circumstances of
the case may require to give effect to the charging order.
(b) A charging order constitutes a lien on the judgment debtor's transferable
interest. The court may order a foreclosure upon the interest subject to the

10. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
Family Limited Partnerships
February 6, 2014
Page 4 of 5
charging order at any time. The purchaser at the foreclosure sale has the rights
of a transferee.
(c) At any time before foreclosure, an interest charged may be redeemed:
(1)
by the judgment debtor;
(2)
with property other than limited partnership property, by
one or more of the other partners; or
(3)
with limited partnership property, by the limited partnership with
the consent of all partners whose interests are not so charged.
(d)
This chapter does not deprive any partner or transferee of the benefit of
any exemption laws applicable to the partner's or transferee's transferable
interest.
(e)
This section provides the exclusive remedy by which a judgment
creditor of a partner or transferee may satisfy a judgment out of the judgment
debtor's transferable interest.
(f)
No creditor of a partner shall have any right to obtain possession or
otherwise exercise legal or equitable remedies with respect to the property of
the limited partnership.
2.3.
2.4.
3.
In re Schwarzkopf, 626 F. 3d 1032 (9th Cir. 2010).
Standby Foreign (or Nevada) Trust. All remedies are local.
Relationship To Other Structures.
3.1.
Captive Insurance Companies.
3.1.1. FLP can own the captive.
3.1.2. Captive can invest in the FLP.
3.2.
Pensions.
3.2.1. Pension can co-own a property with the FLP (mere co-ownership is not a
prohibited transaction).
3.2.2. Pension’s investment in a non-disqualified person (less than 50%
fiduciary, owner of plan sponsor, etc. – IRC §4975(e)(2)) which can
reduce value of DBPP which can increase funding obligation. Just one
example of solving tax problems using estate tax planning.
3.3.
“C” Corporations.
3.3.1. Fact. More now due to increased California personal rates.

11. LAW OFFICES
GIVNER & KAYE
A PROFESSIONAL CORPORATION
Family Limited Partnerships
February 6, 2014
Page 5 of 5
3.3.2. ROLPs. Again solving tax problems using estate tax planning.
3.4.
Life Insurance.
3.4.1. ILITs As LPs.
3.4.2. FLPs As Alternatives.
3.5.
Real Estate.
3.5.1. February 29, 2008, BOE LTA Q&A 17.
3.5.2. §1031 Exchanges. No “before” holding period. No exchange of LP
interests.
3.6.
3.7.
CRATs.
3.8.
CLATs, especially T-CLATs.
3.9.
4.
Series LLCs.
CUTMA.
Reasons To Choose.
4.1.
Step Up In Basis. 37.1% capital gains tax rate (38.288%?) Note February 6,
2006, IRS “Bogus Optional Basis Adjustment” announcement.
4.2.
LLC Alternative. Gross receipts tax is discouraging.
4.3.
Estate Tax Planning.
4.3.1. The 3 Legged Stool.
4.3.2. Preferred Partnerships. Parent retains fixed, annual, cumulative preferred interest but no growth in excess of coupon. Also liquidation preference. Junior equity has minimum value equal to at least 10% of the
entity’s gross assets under the subtraction mention of value. The smaller
the percentage that is preferred, the better “coverage”. With big lifetime
exclusions, having a lower percentage is easier. Interest is based on
high quality publicly traded securities. Parents can transfer preferred
interest to a CLAT and use to freeze a QTIP.