For several decades, estate planners have been using entities such as family limited partnerships or family limited liability companies as an estate planning tool.

The FLP or FLLC is used as a “wrapper” to hold marketable assets, which are transferred to trusts for the taxpayer’s children, while taking discounts for lack of marketability, effectively discounting the value of the gift. Depending on the liquidity of the assets, the discount may typically range from 25 to 40 percent.

Although the IRS has viewed these strategies as abusive, it has conceded that there is some discount applicable to the transfer of the family entity. Most of the recent cases have revolved around the size of the discount, with experts on both sides weighing the effect of lack of control and lack of marketability on the value. Since there hasn’t been enough support to clamp down on the use of these vehicles legislatively, the Treasury has issued proposed regulations aimed at curbing these transfers.

“The proposed rules have been expected for a few years,” said Cliff Gelber, a partner at the South Florida accounting firm Gerson, Preston, Klein, Lips, Eisenberg Gelber PA.

As a result, advisers have been encouraging those who may be affected to get the transfers done early before the rules become final, Gelber indicated. “We expect a flurry of these transfers to take place prior to the effective date as individuals plan for these new rules,” he said.

“The IRS hopes that it can use this approach to disallow valuation discounts for FLPs and similar entities that are controlled by a single family, or by members of a single family with a small number of outsiders who have been added for the purpose of avoiding Section 2704,” said Mark Williamson, a partner at Alston Bird and leader of its Wealth Planning Practice Group. “The regulations will not become effective until after a public comment period, and we expect challenges to these regulations once they are in effect. As we wait for the outcome, it is in the best interest [of taxpayers] to prepare for these changes and fully understand their implications.”

The actual ability for discounting comes from the underlying partnership or shareholder agreement as to what right the partner or shareholder has, according to Gelber. “A business valuation expert will then come in and assess what the value is, and will give an opinion based on all the rights and privileges this person has to equity or ownership.”

While some had feared the proposed regs might be retroactive, the Treasury has generously provided a window of opportunity to use the family entities until the end of the year. There is a 90-day comment period, with comments due by Nov. 2, 2016, and a hearing scheduled for Dec. 1, 2016. The final regs would not become effective until 30 days later, giving advisers until the end of the year to set up an FLP or FLLC to get the benefits of the discounts inherent in them as they are today.

For anyone who will have a taxable estate, the window is closing on the opportunity to do it, emphasized Gelber. “For those who have been procrastinating, now is the time to step up.”