Can I Put My Home in a Family Limited Partnership or Family LLC?
August 16, 2007

Q: I've heard a lot about family limited partnerships (FLP) or family LLC's (FLLC) as a tool to pass control and value to my children for estate and gift tax purposes. That is, I can maintain control over a gift, but give any future increase in value to my heirs to be. Can I put my home in a FLP or FLLC?


A: You should not put your home in a FLP or FLLC because these are meant to be business entities. Although you or your family might think otherwise, we don't reside at our place of business. The IRS is particularly vigilant about how FLPs and FLLCs are managed. If they are not managed as a business, following all of those business rules you CPA has demanded you follow, you will probably run into trouble with a FLP or FLLC. If you are interested in exploring a FLP or FLLC, talk with a professional first. They can be very practical and efficient tools. But like a chainsaw in the hands of someone inexperienced, the outcome can be disastrous.

If you have questions, please contact:
Charles B. Jones, Esquire

(410) 752-2468