Fifth Circuit Rules That Decedent’s Intent Was Sufficient To Create Partnership

The Fifth Circuit in Keller v. United States (Docket No. 10-41311) has affirmed the district court's ruling (Docket No. 6:02-cv-00062) that assets of a family limited partnership (FLP) were established before the decedent's death, even though no assets had actually been transferred by that time. As a result, the estate was entitled to a refund of estate taxes based on valuing the FLP interests with discounts of approximately 47.5%. It further determined that interest on a loan from the FLP was deductible under Section 2053.

The case revolved around the decedent's intentions at the time of her death. Following her husband's death in January 1999, the decedent had spent considerable time with her advisers regarding various options for the protection and disposition of some of the assets in two trusts. One trust, for which a qualified terminable interest property election had been made upon her husband's death, consisted of his separate property and his one-half