Family Limited Partnership/LLC
A family limited partnership or a family limited LLC is a business arrangement in which some of the assets of the parents, usually, are placed into either a limited partnership or an LLC. The choice between which entity to use will depend on the particular circumstances of your case.
In general, the assets are placed in the entity. At that time a proper valuation of the assets is made for tax purposes. In a typical situation, the parents will give up to 99% of the ownership of the entity to the children. However, the parents, with their minority interest, will remain the general partner or the manager of the LLC. This enables them to continue to control the asset while still giving away most of the ownership of it.
A family limited partnership or a family limited LLC is primarily used to reduce the gross (taxable) estate of the parents. It is often possible to discount the value going to the children because they do not receive any control of the asset.
As with all advanced planning, this method should only be used upon the advice and with the close guidance of your attorney and your tax advisor.