One reason people seek the advice of estate planning attorneys is to lower their potential estate tax burdens in a way that does not limit their ability to manage their assets. People might be aware, for example, that the gift tax exemption allows them to give assets to family members, which lowers the value of their own estates. However, it has the drawback of losing control over the gifted assets.
With proper estate planning people can take advantage of the gift tax exemption and retain control over the gifted assets.
One way to do that is by setting up a family limited partnership as New Jersey 101.5 discusses in "Benefits of a limited family partnership."
In a family limited partnership the general partner owns a 1% share of the partnership and the other 99% is given to other family members. The general partner, however, has full control over the management of the partnership and its assets.
Because ownership is limited to family members assets transferred through a family limited partnership receive a discount for gift tax purposes. Essentially the gift tax exemption can be stretched further than if assets are given away directly.
The family limited partnership can be used to give family members extra income now or to allow wealth to grow for later use.
Because family limited partnerships have tax consequences both for the person creating one and potentially for the other family members involved it is important to seek the advice of a qualified attorney when founding and managing the partnership.
Reference: New Jersey 101.5 (May 18, 2016) "Benefits of a limited family partnership."