Wednesday, May 31, 2017
The U.S. Tax Court, in Estate of Powell, recently held that cash and marketable securities transferred into a family limited partnership (FLP) under a power of attorney were includable in the decedent’s gross estate. The transfer was made about one week prior to death. There were unusual circumstances that made the decision less surprising, but the decision remains notable. In their discussion, the majority outlined a new analytical framework to prevent double taxation on an FLP interest and its underlying assets when there is an inclusion under Internal Revenue Code Section 2036(a). Practitioners advising clients regarding new or existing FLPs should be cognizant of Powell and engage in a pointedly holistic analysis of the FLP and the estate plan.
See N. Todd Angkatavanich, James Dougherty & Eric Fischer, Estate of Powell: Stranger than Strangi and Partially Fiction, Wealth Management.com, May 25, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.