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The Partnership Agreement can be drafted to make the senior family members the managing general partners with sole management control over the partnership. The children can have as much or little control as desired. After the Family Limited Partnership has been established, it can be used as part of the transferor's estate plan to make discounted lifetime gifts to the children. Alternatively, the interest in the FLP can be held until the first of the transferor's death after which time the surviving spouse can then begin making gifts of the limited partner interest to the children. The second use of the FLP has the double benefit of allowing the survivor's full step up of basis of the underlining partnership assets for income tax purposes after the first death and following the survivor's death the limited partner interest can still be discounted for estate tax purposes. The Minority Discount of the value of the Limited Partnership interest allows the transferor to effectively make large annual tax free gifts. In the case of real estate, the due on Sale Clause or Acceleration Clause of the underlining promissory note and deed of trust which secures the real estate to be transferred should be reviewed. Stock accounts held in "Street Name" by securities companies can be transferred by an assignment document between the transferor and the FLP and the proper execution of the internal documents of the securities company. It is normally a good practice to make sure that any brokerage accounts transferred into the FLP are free of margin loans because a margin call can result from the transfer into the FLP. Many closely held corporation stocks contain restrictions on transferability. Assuming that the stock can be transferred into the FLP, the old Share Certificate should be delivered to the Corporate Secretary or Stock Transfer Agent for cancellation and a new Certificate issued in the name of the FLP.

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