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As a business owner or investor, it’s important to safeguard the fruits of your hard work and dedication. One strategy to consider is creating a family limited partnership (FLP) which can provide protection from taxes, creditors, and probate for you, your investments, and your loved ones.
A family limited partnership (FLP) is a legal entity owned by multiple family members, and used to hold assets such as properties, businesses, and accounts. The FLP has a designated general partner who manages the partnership and is compensated for their work, but also has unlimited liability. Limited partners, on the other hand, do not manage the partnership but are allowed to vote on the partnership agreement and receive the income and profits of the partnership without any liability.
It is common for parents to be the general partners, as they usually contribute assets they own and want to maintain control over them while transferring them to the next generation. This can be done by giving the children limited partnership interests while the parents retain the general partnership interests.
A family limited partnership (FLP) can be an effective estate planning strategy for several reasons:
While a family limited partnership (FLP) offers many benefits, there are also some downsides to consider:
If you’re looking to plan for your business or investment portfolio with an eye toward passing it on to future generations while also protecting your savings, minimizing taxes, and retaining control, we would be happy to talk with you about how a family limited partnership (FLP) can help. Let’s schedule a call to discuss your specific needs and create a tailored plan to safeguard you and your loved ones.
Start Planning Today!
(571) 260-0827