Axiom Valuation provides fast and cost-effective, certified valuation services for Family Limited Partnerships (FLiP) and Limited Liability Companies (LLC), two popular wealth transfer mechanisms used in estate planning.

Valuation of FLiPs and LLCs

Family limited partnerships are a means for the consolidation and protection of family assets for future generations. FLiPs enable the original owners of these assets to manage and control these assets, while reducing the gift and estate tax costs involved in the transfer of assets to family members. In recent years, LLCs have emerged as an appropriate family estate planning alternative to FLiPs in certain circumstances.

These entities can contain a diverse array of assets, including stock in privately owned businesses, public company stock, and real estate. When making a gift or upon the death of one of the partners (FLiP) or owners (LLC), the assets in the FLiP or LLC must be valued by a professional appraiser.

Discounting the Value of FLiP and LLC shares

For gift and estate tax purposes, the value of a FLiP or LLC interest is based on fair market value, i.e., the price a willing buyer would pay a willing seller. Because of the restrictions on the ability of the limited partners to control the assets and the lack of marketability of the FLiP or LLC interest, the valuation of a FLiP or LLC interest is discounted from the sum of the fair market values of the underlying FLP assets. The size of the discount depends on the nature of the FLiP or LLC agreement and its assets, the size of the interest being valued, and applicable state law.