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.
In some cases, yes.
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.
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.
Attorney John Mangan is board certified in Wills, Trusts & Estates by the Florida Bar. Please call us at 772-324-9050 or use our Contact Form to set up an appointment. We help clients throughout Florida, including Stuart, Palm City, Hobe Sound, Jupiter, and Port St. Lucie.