Letters To The Editor FLP Flaws Come From Implementation, Not Strategy
In their October 2003 article "Are FLPs On The Road To Oblivion?" Mr. Darby and Ms. Zacharias seem to suggest that family business entities might be endangered as an estate-planning tool.
William Shakespeare wrote, "First, kill all the lawyers." He did so because lawyers are sticklers for details and arcane little rules. The lawyers employed by the Internal Revenue Service are the stickiest of sticklers.
Does the Strangi II case (Gulig v. Comm‚r, 293 F.3d 279 (5th Cir. 2002) point to a fatal flaw in family business entities as an estate planning tool? Or, does the case simply point out a flawed implementation of one?
To me, the flaw seems to be not in the strategy but in the implementation.
The point on which the Service was being a stickler was this: If you‚re going to call it a business, you darn well better run it as a business. The facts of the case indicate there was no true differentiation between the decedent‚s assets and the FLP‚s assets. Indeed, the FLP was regularly paying the decedent‚s obligations in spite of its own charter stating it was to be managed as a business in a businesslike manner. Good estate-planning attorneys warn clients about this very trap.
To me, the Strangi cases appear to be the classic "set up an estate plan and the client fails to follow it properly." The truly ironic twist to the Strangi cases is that the son-in-law who set up the FLP was himself a lawyer.
Todd C. GanosDoolittle &
Ganos Investment Counsel LLC
Nick Murray Does It Again
His latest rant (January 2004) should be sent to every major magazine, radio, television station and newspaper in America. He is so right on!
Philip C. Strick Jr., CFP, ChFC, QFP
Royal Alliance Associates Inc.
Newport Beach, Calif.
No Bullion Here
In "The Insurance Policy That Pays Off," (December 2003) by Greg Bresiger, he refers to First Eagle Global A Fund as being "a pure play ... it owns gold bullion and very little else."
This fund in fact holds no gold bullion, but instead a basket of common stocks from around the world.
The First Eagle Gold Fund holds a little bit of bullion, but is mostly common stocks of mining companies.