However, property which is given away before death does not receive an "adjusted basis," so the gift and estate tax benefits of limited partnerships usually result in much larger capital-gains income tax bills if the partnership assets are later sold. (This is acceptable if the capital gains tax is less than the estate tax saved.) Some techniques may involve painful side effects (e.g., taxes on "phantom income"), and all create substantial accounting burdens.
The new "limited liability company," starting in 1995, will provide a new business entity which offers some of the estate-planning benefits of a limited partnership but somewhat broader liability protection for owners who are active in the business.
The use of "business trusts" or even more unusual "offshore" trusts or other offshore legal entities is sometimes appropriate for a very limited group of individuals. The high cost and likelihood of legal challenges make this technique unsuitable for most people.
If you believe that advanced estate-planning techniques are appropriate for your situation, make sure that you consult with attorneys who are familiar with both the estate-planning and business aspects of such techniques.
You should never rely on a non-attorney (or on an attorney who does not personally meet with you and discuss your circumstances), for your estate-planning needs. This is especially true for "advanced" estate planning techniques, which often bring very close scrutiny from the IRS, other agencies, and courts.