A Family Limited Partnership, as its name implies, is an arrangement where a family forms a limited partnership to hold family businesses and investments. In this arrangement, parents can make “gifts” of partnership interests to their children. The benefits of a Family Limited Partnership include asset protection and discounts for estate and gift taxes.
Family Limited Partnerships work well, but only if they are used carefully. The partnership must be funded and maintained. This often includes keeping up with the legal aspects of the partnership like paying annual fees and adhering to the Operating Agreement. In addition, not all assets should be placed into the partnership. Families should be sure to separate their personal assets, like the family home and monthly bills, from the partnership assets. Make sure to consult with an estate planning attorney to ensure that a Family Limited Partnership is working as it should to protect your assets.
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