The family limited partnership (FLP) and family limited liability company (FLLC) are estate planning devices which are used to eliminate or minimize gift tax liability resulting from transferring assets to the next generation in a family. An individual establishes a FLP or FLLC and transfers valuable assets (for example, a piece of investment real estate) into that entity. Fractional shares in the entity can be transferred to beneficiaries. By transferring a small interest to the beneficiaries (also known as a "minority interest") the individual is entitled to take a "minority discount" on the gift, thus reducing the amount of the gift for gift tax purposes. By coupling the minority discount with the annual federal gift tax exemption of $12,000.00 per person, the FLP or FLLC becomes a powerful tool to reduce or avoid federal gift and estate tax liability.