"Family" Limited Partnerships

How Formed? These are formed in the same manner as any other limited partnership. The difference is that the partners are all members of a family, and one of the purposes for the partnership is family estate planning.

Taxation: Same as with any other limited partnership, except that Internal Revenue Code Section 704(e) is likely to be of concern. Also, careful planing is indicated for transfers of California real property into an entity; if that entity does not have the same persons holding interests in the entity as held interests in the real property before the transfer into the entity, there is a "change in ownership." Furthermore, the parent/ child exclusion may not be available for gifts of partnership interests; upon a change of more than 50% of the underlying partnership interests, there will be a change in ownership triggered.