Creating a Family Limited Partnership
Family Limited Partnerships (FLP) have many benefits with the main goal being to move wealth from one generation to the next. Is this something your family is considering? If so, the first step is to get a team of professionals in place to design the partnership. At a minimum, this team should include the client, an attorney, a financial advisor and a CPA. Once the team is in place, you’ll need to meet to determine the financial goals of the client. Once this is established, the operating agreement should be organized to meet these financial goals. The proper filings for a Tax Identification Number and Articles of Organization should take place, as well as determining which financial institution to open the FLP account. Careful consideration should take place to determine which assets will be used to fund the FLP.
There are many advantages for creating a FLP, some include:
- Assets placed into the limited partnership proved some protection against creditors
- You may facilitate gifting programs to utilize the annual and lifetime gift tax exclusion
- Avoids fractionalization of titles
- Allows shifting of assets to younger generations in the family
Stay tuned to our upcoming post on The Accounting for Family Limited Partnerships. You can also contact your Anders advisor to determine if a FLP is right for you.