What is a Family Limited Partnership?

A family limited partnership (FLP) is a legal strategy commonly used as a tool for transferring wealth to children or family members. FLPs offer several benefits over gifting or bequeathing assets directly to your heirs, and are often used as a business succession strategy. Gift and Estate Tax Benefits Large estates may be subject to the estate or death tax. Similarly, gift taxes may be owed if a large gift is given to one person or if the person giving the gift has exceeded their lifetime exclusion amount. FLPs allow you to leverage your annual gift exclusions to give greater value to your loved ones without paying any gift tax. An FLP is typically set up with a married couple as general partners and their children as limited partners. Assets are placed in the FLP and limited partnership interests are gifted to the children. How does this reduce estate or gift tax? The limited partner interests are worth less than the outright value of the partnership assets. This is for two…

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