A Family Limited Partnership (FLP) is a limited partnership business entity that is limited to family members. Once the FLP is funded and its shares are distributed, a taxable gift may occur. However, lack of marketability will reduce the amount of the gift. Therefore, the FLP may result in reduced estate or gift taxes. The General Partner(s) is responsible for managing the FLP and its assets. Limited Partners have an ownership interest but no right to manage or sell; often the limited partnership interests are held by children. If your assets are transferred to an FLP, you do not personally own the assets at all but own a certain percentage of partnership shares.
It is important to note that there must be legitimate business reason, not just avoidance of estate or gift tax, to form it. This reason could be as simple as keeping assets within the family, centralized management of family assets, or some protection from creditors.
Our firm can help you set up a family limited partnership to suit your needs.
We invite you to learn about our FLP services by contacting us online or by phone 310-517-8600. Based in Torrance, our lawyers serve clients throughout Southern California.