BROWSE

Family Limited Partnership (FLP)

What is 'Family Limited Partnership - FLP'

A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.

Explaining 'Family Limited Partnership - FLP'

An FLP is different from a conventional trust, as family members actually own a share in a business. Shares can be gifted to family members over years, thus taking advantage of gift tax exemptions on an annual basis. The assets held in an FLP impact the level of estate tax savings that can be realized by using an FLP. In general, the more illiquid and complex the asset mix, the more difficult the FLP is to evaluate, and the larger the potential for estate tax savings.


Further Reading


Economic Substance Doctrine Applied to Determine the Validity of a Family Limited Partnership for Federal Transfer Tax Purposes: Knight v. Commissioner
heinonline.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Estate Planning with the Family Limited PartnershipEstate Planning with the Family Limited Partnership
heinonline.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

The Managed Asset Portfolio Market Analysis in Litigation: Calculating Reliable Discounts for Lack of Marketability for Non-Controlling Family Limited Partnership …The Managed Asset Portfolio Market Analysis in Litigation: Calculating Reliable Discounts for Lack of Marketability for Non-Controlling Family Limited Partnership …
papers.ssrn.com [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Family limited partnerships: decanting family investment assets into new bottlesFamily limited partnerships: decanting family investment assets into new bottles
www.jstor.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Making Sense of Family Limited Partnership Law After Strangi and Stone: A Better Approach to Planning and Litigation Through the Bona Fide Transaction ExceptionMaking Sense of Family Limited Partnership Law After Strangi and Stone: A Better Approach to Planning and Litigation Through the Bona Fide Transaction Exception
heinonline.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

MANAGING FEDERAL ESTATE TAX LIABILITY WITH TEXAS FAMILY LIMITED PARTNERSHIPSMANAGING FEDERAL ESTATE TAX LIABILITY WITH TEXAS FAMILY LIMITED PARTNERSHIPS
search.proquest.com [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Family Limited PartnershipsFamily Limited Partnerships
www.questia.com [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Death and Taxes: The Family Limited Partnership and Its Use in Estate Planning after the Third Circuit's Ruling in Estate of Thompson v. CommissionerDeath and Taxes: The Family Limited Partnership and Its Use in Estate Planning after the Third Circuit's Ruling in Estate of Thompson v. Commissioner
heinonline.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …

Family Limited Partnerships and Family Limited Liability CompaniesFamily Limited Partnerships and Family Limited Liability Companies
heinonline.org [PDF]
… In order for the partnership to be bona fide, it would be necessary for the individuals residing in the residence to pay rent to the partnership." Arthur D. Sederbaum & Joseph P. Scorese, Family Limited Partnerships: Wealth Planning for Families into the Future, 276 PLI …



Q&A About Family Limited Partnership (FLP)


How does this strategy work when there are multiple generations involved?

This strategy works by gifting shares each year until all desired beneficiaries have received their share of ownership in the company. Each beneficiary will then receive his or her portion upon death, which will not trigger any additional estate taxes due to the fact that they already paid taxes on their initial gift when they received it .

Are there any disadvantages associated with using an FLP ?

There are no disadvantages associated with using one , but there may be other reasons why someone might choose not use one .

What is a Family Limited Partnership?

A family limited partnership is a type of partnership designed to centralize family business or investment accounts.

What are some advantages of using an FLP?

The advantages include estate tax savings and asset protection.

Who should consider using this strategy ?

Anyone who wants to pass wealth down through several generations without paying unnecessary estate taxes should consider using this strategy .

What assets do you need for the most potential estate tax savings with an FLP?

Illiquid and complex assets mix.

How does an FLP differ from a conventional trust?

An FLP differs from a conventional trust as family members actually own shares in the business. Shares can be gifted to family members over years, thus taking advantage of gift tax exemptions on an annual basis.

Leave a Reply

Your email address will not be published. Required fields are marked *