But affluent families on the lower end of that range also risk running afoul of the I.R.S. by being too aggressive in what they put into a partnership and how much they discount it. As families look for ways to get the most out of this year’s gift tax break, many of the advisers I spoke with said they were worried that less sophisticated families would be misled into thinking that they could put everything they had into a family limited partnership and never worry about taxes.
Jason Cain, a director in the family wealth group at Credit Suisse Private Bank, said less affluent families — usually those with $10 million or less — had misused these partnerships. “The I.R.S. has been very selective in litigating only the most egregious scenarios,” he said. “They have gone after $6 million families that put all of their assets into a family partnership and then treated it as their checking account.”
G. David Hamar Jr., co-chairman of the family office services group at Silvercrest Asset Management, said he, too, had seen people misusing these partnerships by doing things like putting their primary residence into one and continuing to live there rent-free.Page 2 of 7 | Prev Page | Next Page