Family Limited Partnership

Estate Tax

A federal or state tax imposed on the transfer of a deceased person's assets to their heirs, calculated based on the total value of the estate above a certain exemption threshold. As of recent years, the federal estate tax exemption is quite high, meaning most estates do not owe federal estate tax, though some states impose their own estate taxes with lower thresholds. Proper estate planning using trusts and other strategies can help reduce or eliminate estate tax liability.

Gift Tax

A federal tax applied when someone transfers money or property to another person without receiving something of equal value in return, above the annual exclusion amount set by the IRS. The annual gift tax exclusion allows individuals to give a certain amount per recipient per year without triggering any tax reporting requirements. Gifts above the annual exclusion count against your lifetime estate and gift tax exemption.

Trust

A legal arrangement in which one party, called the trustee, holds and manages assets on behalf of another party, known as the beneficiary. Trusts can be used to control how and when your assets are distributed, potentially reduce estate taxes, and avoid the probate process. There are many types of trusts, each designed to address specific financial and estate planning goals.

Partnership

A business structure in which two or more individuals share ownership, responsibilities, profits, and liabilities of a business. Partnerships come in several forms, including general partnerships where all partners share liability equally, and limited partnerships where some partners have limited liability and a more passive role. Partnership income passes through to the partners' individual tax returns, avoiding corporate-level taxation.