Family limited partnerships and control discounts
DOI:
https://doi.org/10.61190/fsr.v16i2.4885Keywords:
Estate taxes, FLP, Power, VotingAbstract
Distributing assets to Family Limited Partnerships (FLPs) is an estate planning technique designed to reduce assets subject to estate taxation. This paper discusses power index models as measures of power along with extensions of indices to value minority discounts. Power indices and valuation models proposed here are directly applicable to valuing other business entities, particularly where control might be contested. Key among factors affecting control valuation is that voting power among FLP partners is not proportional to ownership. This point is especially important to FLP creation because tax-driven value reductions are directly tied to minority voter discounts.
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