Catherine is a woman of significant means, and her financial advisor has recently informed her that she can reduce her future estate tax liability significantly by transferring her assets to a family limited partnership. Upon hearing this fantastic news, Catherine directs her attorney to form the partnership to which Catherine and her children will make contributions. Catherine contributes the bulk of the partnership property, assigning her residence, her entire marketable securities portfolio, and all of her municipal bonds to the entity in exchange for her interest therein. The only thing she retains in her name is her vehicle and a checking account with a few thousand dollars. Catherine continues to reside in the residence, and she uses a debit card on the account she transferred to the partnership to pay her personal expenses. Discuss the future estate tax consequences of the arrangement.

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What Is Estate Planning Estate planning is the preparation of tasks that serve to manage an individuals asset base in the event of their incapacitation or death The planning includes the bequest of as... View the full answer