Estate planning starts with asset protection, ensuring clients’ wealth is preserved, protected, and passed on according to their wishes. Mark Fishbein, with ALTA Estate, is an experienced estate planner serving Tucson and Southern Arizona. Whether crafting a strategic estate plan, providing guidance on the intricacies of tax implications, or establishing family-limited partnerships, ALTA Estate strives for excellence and client satisfaction.
What Is a Family Limited Partnership (FLP)?
A Family Limited Partnership (FLP) is a legal entity through which families can manage and protect their assets. In an FLP, family members assume the roles of general and limited partners. The general partner maintains control over managing the partnership’s assets, while limited partners contribute assets and have limited control and liability. This structure is precious for high-net-worth individuals seeking to preserve family wealth and effectively manage estate taxes, serving as a powerful estate planning tool.
How Do You Set Up a Family Limited Partnership?
Establishing an FLP requires careful planning and adherence to legal procedures. Initially, family members must agree on the limited partnership’s terms, which are documented in a partnership agreement. This agreement outlines each partner’s roles, responsibilities, and ownership percentages. Subsequently, the family must register the FLP with the state and transfer assets into the name of the partnership. Consulting with an experienced estate planner and a tax expert is vital, as there are complex legal and tax implications.
Understanding the Roles: General and Limited Partners
In an FLP, general partners manage the partnership and make all significant decisions, a process that highlights the advantages and disadvantages of creating a family-limited partnership. They are responsible for the day-to-day operations and have unlimited liability. Limited partners contribute assets and become owners of the partnership interests but do not participate in management. This structure allows families to control their assets while involving future generations, fostering the effective transfer of family assets among family members.
What Are the Advantages of a Family Limited Partnership in Estate Planning?
FLPs offer several advantages.
Asset Management and Protection
An FLP enables families to manage their assets collectively. General partners have the autonomy to handle the partnership’s assets, while limited partners—often younger family members—have lesser control and liability. This arrangement is essential for those who wish to keep family wealth consolidated and protected from external risks.
Flexibility and Control
Setting up an FLP allows you to define the terms of asset distribution and management within the partnership agreement, granting you flexibility and control over your estate.
Asset Protection from Creditors
Transferring assets into an FLP protects your wealth against creditors and legal claims. The FLP owns the assets, not the individual partners, offering a shield against personal liabilities.
Tax Advantages
An FLP can provide substantial tax benefits. Transferring assets into an FLP may reduce your taxable estate’s size, allowing you to leverage the annual gift tax exclusion and lower the estate’s overall tax liability.
Seamless Wealth Transfer
Clear guidelines for asset distribution in an FLP streamline the wealth transfer to the next generation, prevent family disputes, and ensure estate management aligns with your long-term intentions.
Creating an FLP: Legal and Financial Considerations
Creating an FLP involves drafting a partnership agreement, registering the partnership with the state, and transferring assets into the partnership. This process requires meticulous planning and consultation with legal and financial professionals to ensure compliance with state laws and tax regulations, especially for tax purposes and protecting family assets.
Is a Family Limited Partnership Right for Your Estate Plan?
Whether an FLP suits your estate plan depends on your needs, financial goals, and family dynamics. An FLP offers both advantages and disadvantages as an estate planning tool. Consulting with an experienced estate planning attorney can help you evaluate the benefits and drawbacks of an FLP and decide if it aligns with your estate planning strategy, particularly for family businesses.
Protecting Your Assets with Professional Guidance
Mark Fishbein of ALTA Estate provides strategic estate planning services that address wealth management and asset protection, making it an invaluable tool for family businesses. The ALTA Estate team dedicates itself to crafting bespoke estate plans that reflect its clients’ individual goals and needs, ensuring the utmost care and professionalism.
Feel free to call the Tucson Estate Planning Preparers at (520) 462-4058 to learn more about proper and complete Tucson Estate Planners and Asset Protection, including the Emergency Telephone Hotline Program afforded to you and your family members at no charge during times of crisis and the other benefits of estate planning described above. Follow Mark Fishbein Tucson Estate Planner on LinkedIn or Facebook.
The text above is for general informational purposes and should not be considered legal advice. For more information, click Contact Us.
The text above is for general informational purposes and should not be considered legal advice. For more information, click Contact Us. Follow Mark Fishbein, ALTA Estate Planning, on LinkedIn or Facebook.
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