Family Limited Partnership (FLP)
A Family Limited Partnership (FLP) is a type of partnership primarily used for estate planning and asset protection, where family members are involved as partners.
In an FLP, one or more family members act as general partners who manage the partnership, while other family members serve as limited partners, contributing capital but having no say in day-to-day operations. This structure allows for the centralized control of family assets, facilitates the transfer of wealth to younger generations, and may provide tax benefits and protection from creditors.
For example, a family might establish an FLP to hold real estate or a family business, allowing the general partner to manage the assets while limited partners receive distributions. This can also help minimize estate taxes upon the death of the general partner, as the value of the limited partnership interests can be discounted for gift and estate tax purposes.
« Back to Glossary Index