Opinion of the Connecticut Probate Court: Note: It's a Tax Thing: The Misnamed "Heightened Scrutiny" Standard for Evaluating Family Limited Partnerships Skip over navigation
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Copyright (c) 2013 Quinnipiac Probate Law Journal Association
The Quinnipiac Probate Law Journal

Opinion of the Connecticut Probate Court: Note: It's a Tax Thing: The Misnamed "Heightened Scrutiny" Standard for Evaluating Family Limited Partnerships

2013

The Quinnipiac Probate Law Journal

26 Quinn. Prob. Law Jour. 403

Author

Kevin A. Lucid*

Excerpt



I. Introduction
 
Benjamin Franklin once quipped that "nothing can be said to be certain, except death and taxes." 13 More accurately, Franklin, a member of the Continental Congress and the country's first Postmaster General, 14 may have said that "nothing is certain but tax upon death." Due to the provisions in the Code governing the payment of taxes upon the assets in a decedent's estate, Family Limited Partnerships ("FLPs") have become a popular way for estate planners in the United States to reduce the amount of tax owed upon a taxpayer's passing.

This discussion will focus on the effect that using an FLP as an estate planning tool may have on the estate tax that a taxpayer's estate will owe to the Internal Revenue Service ("IRS"). 15 In particular, it will focus on the level of scrutiny that courts afford to the transfer of assets into FLP entities under the "heightened scrutiny test." The Article will then compare the rather docile scrutiny that the IRS uses for such transfers with the much more stringent "heightened scrutiny" standard that governs state actions under the Fourteenth Amendment of the United States Constitution. The Article will conclude by comparing these two standards, and explaining that the "heightened scrutiny" standard is less demanding in the realm of tax law than it is in the protection of constitutional rights. In light of this conclusion, the Article will recommend that estate tax planners can effectively use FLPs for their clients in ...
 
 
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