More–but only a little–about the Holliday case

Written by Jim Worthington on April 9, 2016

The Estate of Sarah D. Holliday Tax Court case mentioned briefly last month was a win for the IRS but hasn’t generated much buzz in the estate planning community. Essentially, the Tax Court held that the late Ms. Holliday’s family limited partnership was nothing more than an estate planning device with no non-tax reason to justify it. Ms. Holliday’s family didn’t benefit from the facts that the planning took place three years after she had moved to a nursing home and that one of her sons testified that she had not been involved in the decision to use the family limited partnership structure. The lesson here is a reminder that the mechanics of forming and operating a family limited partnership are vital to its success.