A family limited partnership is one business succession tool available to family-owned businesses. This business structure allows multiple members of the family to pool their assets and invest in a business together. An alternative use of a family limited partnership, is to have it serve as a holding company for business assets. The day-to-day management of the business then falls on the general partner with careful business planning, as the general partner does have unlimited liability for debts and obligations. Conversely, limited partners are commonly children and grandchildren who receive their partner shares as gifts and have little liability and no management responsibility.
Setting up a family limited partnership in Coral Gables can be challenging, but an experienced lawyer from Veliz & Associates, P.A. could provide helpful services, including drafting and reviewing a partnership agreement and other documents, customizing your FLP to suit the unique needs of your business’ partners, and ensuring all legal documents comply with Florida laws.
Coral Gables families are most commonly interested in forming a family limited partnership when they have significant assets to pass on to their children or grandchildren while minimizing taxes. From an estate planning point of view, there are tax advantages to planning with a family limited partnership.
General partners are tasked with day-to-day management tasks and have unlimited liability for debts and legal obligations. In contrast, limited partners are most often children or grandchildren who have limited liability and are gifted shares of the assets over time. They do not have management responsibilities, though a limited partner can become a general partner by amending the partnership agreement and assuming greater control of the partnership’s assets.
To set up an FLP, several tasks must be completed, including:
While FLPs can be part of a sound business succession plan, they are fairly complicated to set up. There are many potential legal implications involved in establishing this business structure that a lawyer could assist you in understanding. A lawyer could also provide services such as drafting the partnership agreement, ensuring the best strategy for the transfer of assets, and helping to develop an overall estate plan to support your FLP.
Family limited partnerships provide a way to minimize tax burdens and protect assets by allowing two or more family members to develop a business structure to pool assets and profits. In many cases, FLPs establish a way for family-owned businesses to be passed down to future generations. To learn more about setting up family limited partnerships in Coral Gables and whether this business structure has a place in your succession plan, contact Veliz & Associates, P.A.
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