FLP Valuation
A widow asserted her forced share right in the decedent’s augmented estate which included a part sale, part gift transfer to his son of the decedent’s interest in an FLP, the only asset of which was stock in a closely held corporation.
The court in In re Estate of Hjersted, 135 P.3d 202 (Kan. Ct. App. 2006), affirmed the trial court’s refusal to discount the value of the transfer for lack of control and lack of marketablility because son’s position as trustee of the decedent’s trust unified in him control of the FLP, the corporate stock had already been discounted for lack of martketability, and the partnership structure was ignored in practice.
In a related proceeding, the court held that the gift tax liability caused by the valuation of the partnership interest was deductible from the value of the augmented estate.
Special thanks to Prof. William P. LaPiana for bringing this case to my attention.
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