The partnership entity commonly referred to as a Family Limited Partnership (“FLP”) is simply a limited partnership with a general partner and limited partners usually consisting of family members and/or trusts. The entity is formed for asset protection and estate planning.
When clients come to us with an existing partnership agreement for a FLP, it is usually a standard form agreement that would be used to own a building or some other form of investment. It is often beneficial to amend the agreement by replacing it with our FLP Agreement that is drafted for the purpose of protecting assets and estate planning. A few examples of benefits to using a FLP Agreement drafted by Waldron & Schneider include:
- The general partner (“GP”) may withdraw from the FLP without terminating the entity.
- The GP may transfer some or all of its interest in the FLP.
- The GP does not have to become a limited partner (“LP”) after transferring its GP interest.
- The GP has the authority to act without approval of the LPs in most instances.
- There is no requirement for a written legal opinion before transferring interest.
- LPs may transfer any portion of their interest.
- LPs may withdraw from the FLP.
- The purpose statement for the FLP contains language required by the IRS.
- The FLP is permitted to make unequal distributions to the partners.
- The FLP is not required to distribute enough money to each partner to pay federal income tax. It may do that, but it is not required to make such a distribution.
- The GP has fiduciary obligations to the LPs is not permitted to waive them. This language is also required by the IRS.
Call our office today to schedule a review of your current FLP Agreement. Our attorneys can advise you regarding what revisions need to be made, if any.
If you want to learn more about FLPs, please call our office to schedule a meeting with our of our experienced attorneys so we can help you decide whether forming a FLP would be a useful asset protection and estate planning tool for your family,
The legal information in this blog entry is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. Further, nothing contained in this article is intended to create an attorney-client relationship with any reader. This article and website are made available by Waldron & Schneider for educational purposes only and to give basic information and a general understanding of the law, not to provide specific legal advice. By using this website you understand that there is no attorney client relationship between you and Waldron & Schneider. The article and website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. For more information or questions you can contact us and one of our attorneys will be in touch soon.