“Shopping at Walmart” has become part of the fabric of American life.  Walmart is the largest chain of retail stores in the world and the 18th largest publicly traded company in the world.  In 2011, Walmart had just over $420 billion in revenue.  Regardless of your personal feelings about Walmart, there is no denying the global success of Walmart Stores, Inc.

Walmart was founded by Sam Walton in 1962.  Mr. Walton died in 1992.  At the time of his death, a mere thirty years after the founding of Walmart, he had accumulated a whopping $23 billion family fortune. Sam Walton had great foresight when planning for the continued success of Walmart after his death. Mr. Walton had created an ownership structure that was setup as a family partnership.  This helped the Walton family avoid large amounts of estate taxes when Sam Walton died.  Mr. Walton’s four children each held a 20% ownership stake in Walmart, while Sam Walton held a 10% ownership stake and his wife Helen Walton also held a 10% ownership stake.  Sam’s wife received Sam’s ownership stake tax-free at the time of Sam’s death.

This example of the Walton family is a perfect example of the benefits of using a Family Limited Partnership as an estate planning option. Under a Family Limited Partnership, those establishing the partnership would transfer a business to the Family Limited Partnership.  Those that established the Family Limited Partnership would retain control of the partnership.  Overtime they would begin to transfer limited interest to family members of their choosing.  This would allow those family members to begin learning how to take over the family business while limiting their potential liability.  In doing this, one of the primary benefits of transferring assets to your descendants in this manner is it helps minimize potential estate taxes through reducing the size of your estate and possibly by claiming discounts on the business valuation for lack of control and lack of marketability.

If you own a business, it is important to meet with a qualified business attorney to identify if a Family Limited Partnership is the right fit for you.

For additional reading see below:

A Business Succession Plan

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