A family limited partnership (FLP) is a business structure in which all owners of a family-run business pool its money. The partnership can also serve as a holding entity for various family businesses. The amount of profit each member makes depends on the number of shares they own, as outlined in the FLP agreement. Within this structure, there are general and limited partners. An experienced FLP lawyer from Veliz & Associates, P.A. could help you understand this structure and the responsibilities of general and limited partners in Coral Gables FLPs.
A family limited partnership is a business or holding company owned by two or more family members. FLPs are typically created by families wishing to transfer wealth, minimize their estate tax liability, and protect assets from creditors and lawsuits resulting from an irresponsible family member. In addition to tax savings, families often use this business structure as a tool for succession planning. There are two types of partners in a Coral Gables FLP: general and limited partners.
General partners typically own the smallest share of a business and are responsible for managing its day-to-day tasks. They have unlimited liability for the debts and obligations of the company, and are typically compensated through a share of profits or a fixed salary. Most often, a general partner is a limited liability company in which senior family members are the members and therefore can retain control of business assets while transferring their wealth to younger generations.
While limited partners have an economic interest in the partnership, they are not responsible for the day-to-day management of the business. Their liability is limited, based on the amount of capital they contribute to the partnership. Limited partners are often children or grandchildren in the family, and their seniors can donate all or a share of the business interests to them through a direct contribution or by forming a trust.
While FLPs are a useful tool in an overall business succession plan, they are not without challenges. Family limited partnerships can be expensive to maintain and often require the help of several types of business experts, including a business planning lawyer. Attorney Ana M. Veliz is dedicated to serving families, determining and enacting legal and estate plans to protect their hard-earned assets. Contact us today to learn more about general and limited partners in Coral Gables FLPs and begin working on a plan to protect your assets.
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