Free Consultation What do I need an Estate Plan? What is missing from my Estate Plan?
Share

Utilizing Family Limited Partnerships as Part of Your Estate Plan

A Family Limited Partnership (FLP) is a special legal vehicle that can preserve a family business for future generations while helping to shelter assets and reduce overall gift and estate taxes. FLPs are commonly used as part of business succession planning, business continuity plans, and often serve as an integral component of an estate plan for high net worth individuals.

A Family Limited Partnership is typically established by married couples who place assets in the FLP and serve as its general partners. They may then grant limited-partnership interests to the children, of up to 99% of the value of the FLP’s assets. When this occurs, the assets are removed from the general partners’ estates, thus saving on future estate taxes. The general partners keep control of the FLP and its assets, even though they may own as little as just 1% of the asset’s value.                      
                                   
Limited partners may receive distributions from the FLP, and enjoy certain tax benefits. Asset protection is another attractive feature of the FLP. The partnership’s assets are shielded from the limited partners’ creditors. The interests in a FLP can be easily divided among family members, who may each own different amounts. The FLP enables ownership of a business to transfer to the younger generation, while allowing the senior generation to continue conducting operations and mentoring and grooming the young owners.

One of the significant benefits of a properly established and maintained FLP is that it can reduce the value of gifts to your children and grandchildren. The value of each limited partnership interest which you give away decreases the value of your taxable estate and, consequently, any tax which your heirs would have to pay upon your death. The gifts are made using the annual gift tax exclusion, so you may not have to pay any gift tax on the transfer.

Since limited partners do not have the ability to direct or control the day-to-day operation of the partnership, a minority discount can be applied to reduce the value of the limited partnership interests which you are gifting. Therefore, the value of the partnership interests transferred to your beneficiaries may be far less than the corresponding value of the assets in the partnership. Furthermore, because the partnership is a closely-held entity and not publicly-traded, a discount can be applied based upon the lack of marketability of the limited partnership interest. This allows you to leverage the FLP as a vehicle to transfer more wealth to your beneficiaries, while retaining control of the underlying assets.                   

Click here to read more about Family Limited Partnerships as part of your Estate Plan.

Contact a Family Limited Partnership and Estate Planning attorney in Montgomery County.


Located in Merion Station, PA, Sallen Law assists clients with estate planning matters throughout the Philadelphia Main Line area including but not limited to Lower Merion Township, Montgomery County, Bucks County, Delaware County, and Chester County. Attorney Sallen is also licensed to practice in the state of NJ and serves Burlington County, Gloucester County, Camden County.



© 2017 Sallen Law | Disclaimer
408 Merion Place, Merion Station, PA 19066
| Phone: 215-992-9662

Estate Planning | Estate Planning with Wills | Trusts & Estate Planning | Advanced Estate Planning | Estate Planning/Non-Traditional Families | Family Limited Partnerships | Planning for Children | Special Needs Planning | Guardianships | Probate / Estate Administration | Estate Tax Planning | Elder Law | Guardianships for Seniors | Estate Litigation | Testimonials | Resources | About Us

FacebookGoogle+TwitterLinked-In Personal

Law Firm Website Design by
Amicus Creative