Family Limited Partnerships (FLPs) are a type of private investment vehicle used primarily for estate and gift tax planning purposes.
In an FLP, family members create a partnership where one or more family members act as general partners, managing the partnership, while other family members are limited partners, contributing capital but having limited control over management. This structure allows families to consolidate family assets, facilitate the transfer of wealth between generations, and potentially reduce the taxable value of gifts through discounted valuations of limited partnership interests.
For example, a family may establish an FLP to hold family-owned real estate. The general partners manage the property, while limited partners can be children or grandchildren who receive partnership interests as gifts, potentially minimizing estate taxes while maintaining family control over the assets.
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