A Family Limited Partnership is a legal entity that allows family members to pool their assets and manage them as a single entity. It is a way to transfer wealth to the next generation while minimizing taxes and protecting assets from creditors.
A family limited partnership (FLP) is a type of legal entity that is used to manage and protect family assets. It is a partnership between family members that allows them to share ownership of assets while limiting their liability and providing tax benefits.
The primary purpose of an FLP is to provide asset protection and tax savings. By transferring assets to the partnership, family members can protect their assets from creditors and reduce their tax liability. The partnership also allows family members to share ownership of assets while limiting their liability.
An FLP is created by a written agreement between family members. This agreement outlines the rights and responsibilities of each partner, as well as the management of the partnership. The agreement also outlines the distribution of profits and losses, as well as the transfer of assets.
The FLP is managed by a general partner, who is responsible for making decisions about the partnership. The general partner is typically a family member, but can also be a professional manager. The general partner is responsible for managing the partnership’s assets, making investments, and distributing profits and losses.
The FLP is also subject to certain tax rules. The partnership is not taxed as a separate entity, but rather the income and losses are passed through to the partners. This allows the partners to take advantage of certain tax deductions and credits.
An FLP can be a great way for families to manage and protect their assets. It allows family members to share ownership of assets while limiting their liability and providing tax benefits. However, it is important to understand the legal and tax implications of an FLP before setting one up.