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What I would suggest is for them to form a family limited partnership and transfer their assets to this FLP. Then, begin transferring limited partnership interests to their children. This allows the the parents to retain control over all the assets during their life. And, because the limited partnership interests have no control, no rights other than that of an assignee, no transferability, no marketability, and no right to distributions the value of these gifts can be discounted by 25% to 40% of the underlying assets of the partnership. This will get the taxable value of their estate under the total lifetime exemption available of $10,860,000 between the two of them. Also, they should make the $14,000 annual exclusion gifts for each of them per donee.
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Thanks for following up. A full tax memo, including tax codes and case law, is beyond the scope of what I can provide in this forum. It would take an extended period of time to prepare and would not be cost effective to provide for the value of this question. Given this, I am going to opt out so hopefully another expert can timely provide you the detailed memo you seek. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.