Dave and Eleanor Watson headed up a family of four children, nine grandchildren, and two great grandchildren. Their success in life had enabled them to amass a modest fortune that they hoped would benefit their family for future generations. They established a family limited partnership to manage their wealth. Dave and Eleanor also hoped their family limited partnership would help train the next generation in financial and business matters. A family limited partnership (FLP) is usually established by a married couple who, like Dave and Eleanor, desire to pass their wealth down to their families. The couple establishing the FLP transfer assets to it and then one or both serve as general partners. They then give limited partnerships to the younger members of their family. An FLP can be used to hold business assets, family-run businesses, investments, securities, real estate, and other assets. The general partner manages the operations of the family limited partnership, and the limited partners receive distributions from the FLP. Can a Family Limited Partnership Contribute to the Family’s Future? In some cases, yes. FLPs offer tax benefits because the assets of the FLP are no longer part of the settlors’ estate when they pass away. The annual gift tax exclusion can be used so gift taxes are not due (or are minimized) when the limited partnership interests are gifted to the limited partners. FLPs are also used for business succession purposes. A family-run business, for example, might be transferred to the family limited partnership. When the general partner steps down or dies, the business continues being run by the FLP. While limited partners reap the benefits of the FLP, they may receive something more important – training. Senior members of the FLP control the FLP but can allow younger family members to participate in or at least observe the family’s business and investment portfolio transactions. More mature family members can guide younger members in their own decision making. In addition, though, older family members can observe the young people to make sure they are able to handle wealth management, business operations, or financial transactions. In some cases, parents or grandparents may realize they need to establish discretionary or spendthrift trusts to protect their children or grandchildren from rash financial decisions or an inability to manage their money. Learn More About FLPs. Your estate and heirs may benefit from an FLP for generations to come. However, it’s important to make sure an FLP is right for you, and that the FLP is set up correctly. Law Offices of John Mangan, P.A. Palm City – Stuart, FL Do you question the need for attorney guidance with so many online resources? Because laws and regulations are complex, and because every person has a lot at risk, more people than ever are seeking professional guidance from an experienced, knowledgeable source. That helps explain the rapid growth of our firm. Whether you happened upon this website by accident or are one of the many referrals we receive from a nearly 15-year collection of satisfied clients, our staff can provide customized estate planning guidance for you. Call us. Our number: 1 (772) 218-0480
