Many BMK clients are familiar with partnerships and the operation of limited liability companies. If a client is inclined to become a partner with his or her family members, there are planning opportunities available to maximize the transfer of family wealth by minimizing transfer taxes

Generally speaking, family limited partnerships ("FLPs") and family limited liability companies ("FLLCs") are business entities used to fractionalize the ownership of an asset to make it less valuable for transfer tax purposes. This is because the value of the whole entity is not equal to the sum of its component assets. The basic structure works as follows: A client will transfer assets into an FLP or FLLC upon the entity's formation. After the initial transfer, the client will either gift or sell to his or her family members fractional ownership interests in the entity that make them minority owners. The resulting minority share family members will participate in the economic benefits of the entity, but not its management - which the client typically reserves for him or herself. The end result is that the client controls the entity (and its underlying assets) exclusively while the whole family shares in its economic benefits. The transfer tax savings come into play when permitted discounts applied to the value of the entity (for lack of marketability and lack of control) reduce the value of the minority shares gifted or sold to the family members. Used in conjunction with a client's annual gift tax exclusion (currently $12,000 per recipient per year), significant value can be transferred from one generation to the next without incurring any gift or estate taxes whatsoever.

While FLPs and FLLCs are not appropriate for all clients, under the right circumstances they significantly reduce transfer taxes, further increasing the wealth passed on to a client's loved ones.