A family limited partnership (FLP) can be invaluable for family members to transfer assets into a single legal vehicle that ensures the interests and security of future generations. When family members operate a business or own a large variety of assets, a family limited partnership can provide an excellent solution to pool these funds together while preserving family wealth and assuring certain tax advantages.
If you or loved ones have numerous corporate entities you can also consolidate these under a family limited partnership. When you need help starting or managing family limited partnerships in Coral Gables, one of our experienced trusts attorneys can simplify protections for everyone in your family while securing your legacy.
For a family that owns extensive assets (whether that involves a commercial enterprise, real estate, stocks, or other types of property) a family limited partnership can be used to establish a legal partnership between these individuals. The partnership distributes varying levels of power among members of the family, as well as rights to control the assets contained in the structure. It also establishes rules on how to oversee these assets.
A family limited partnership is established to manage business assets. Unlike a typical trust, which is a legal arrangement where a trustee manages assets on behalf of specific beneficiaries, family limited partnerships are designed to safeguard business and investment assets. FLPs also differ from trusts in other ways, including the person granted control over the structure and the level of control over asset management.
The structure of a family limited partnership requires one or more general partners, and one or more limited partners. Family members who may be featured in the partnership include a spouse, as well as children, grandchildren, great-grandchildren, and any of their respective spouses.
General partners in a family limited partnership oversee the management of the partnership, have a controlling interest in it, and bear personal liability for all partnership obligations. Often, the most senior family members are general partners controlling the largest proportion of shares in the family business.
On the other hand, limited partners are passive owners who have a noncontrolling interest in the family limited partnership and do not have management responsibilities. The limited partners profit from the venture through sources like dividends and retain limited liability for the debts of the partnership.
There are numerous potential advantages to a family limited partnership that could make it an ideal tool for safeguarding assets in Coral Gables. An FLP can offer numerous potential tax advantages, including deductions for the federal income tax, and discounts for the federal gift or estate tax.
General partners in an FLP can direct the partnership and make most major business decisions for the family. While limited partners do not acquire this kind of decision-making authority, they are also usually not held liable beyond their investments for any future liabilities that may develop from the FLP.
Another core advantage of family limited partnerships is that they can provide superior litigation protection. General partners can own as little as 1% of the partnership while still controlling the structure and its assets. If managed effectively, a family limited partnership can prevent creditors from accessing ownership interest as well as assets contained within the partnership.
While the FLP is a popular tool that families use to hold investment and business assets, it is wise to work with an estate planning attorney who can oversee its inception. A person in Coral Gables can rely on family limited partnerships to offer favorable solutions to control and enhance your assets, while integrating and training family members in running a business.
Reach out to Veliz & Associates, P.A. to speak with us about your estate planning needs. We will find the right solution that aligns with your personal and business interests
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