RECENT FAVORABLE DECISION CONCERNING ASSET PROTECTION

The case of Keller v. United States, 2006 U.S. Dist. LEXIS 34100 (S.D. Tex., May 26, 2006)     is a significant case for utilizing family limited partnerships for asset protection purposes.  Among other things, the Court recognized that Divorce Protection (protecting family assets from depletion by ex-spouses in divorce proceedings) was a legitimate business purpose.

Also in this $40 million taxpayer victory; a family limited partnership was recognized although not formally funded before decedent’s death; a 47.5% discount was allowed for an assignee interest in the limited partnership’s bond portfolio; a bona fide sale exception to Sections 2036 and 2038 applied; and interest on a loan to borrow money from the partnership after death to pay estate taxes and other obligations was held to be deductible for estate tax purposes.