St. Petersburg Family Limited Partnership Attorney
If you own a family business or have significant assets you want to protect for future generations, a family limited partnership is a great way to do it. You can include a family limited partnership as part of your estate plan, but you must create them carefully so your family can reap the full benefits of it. Our St. Petersburg family limited partnership attorney can assist you with developing an agreement that will protect the legacy you want to leave behind for your loved ones.
Understanding Family Limited Partnerships
Family limited partnerships (FLPs) work similarly to business partnerships. There are two types of partners in FLPs – general partners and limited partners. Typically, older family members act as general partners with the ability to vote and manage and operate the partnership. Younger family members usually act as limited partners. Limited partners are also protected from the liabilities of the partnership, such as debt, but they do not manage the partnership.
Like other types of partnerships, FLPs are also pass-through tax entities. This means that any income the partnership earns ‘passes through’ the business to the partners, so it is taxed on their personal tax returns.
Benefits of Family Limited Partnerships in Florida
One of the biggest benefits of family limited partnerships is that they can protect property from lawsuits, creditors, and other third parties. Assets within an FLP cannot be used to pay the personal debt of any partner. Partnership agreements can also stipulate that any spouse with an interest in the partnership must sell their portion of the partnership in the event of divorce. The property must be sold at fair market value. This clause guarantees that the property will remain in the family, even if two people get a divorce.
FLPs are also effective estate planning tools, as they can help avoid estate taxes and gift taxes for families and individuals with a high net worth. The general partners can transfer ownership to limited partners, so the value of their estate is reduced. Due to the fact that interest is limited, older members of the family can continue to control their investments and assets while minimizing the value of their estate that is subject to taxes.
Drawbacks to Family Limited Partnerships
Family limited partnerships have many benefits, but that does not mean they are always the right fit. There are sometimes drawbacks of using an FLP for certain types of property. For example, capital gains could create an issue depending on the type of assets being transferred through the partnership. Additionally, general partners do not have limited liability and so if they are sued, they do not have any asset protection.
Contact Our Family Limited Partnership Attorney in St. Petersburg for Help
FLPs are valuable tools for both asset protection and estate planning. Before creating yours, it is important to speak to David Toback, our St. Petersburg family limited partnership attorney who can guide you through the necessary steps so you can take advantage of the many benefits they offer. Call us now at 813-252-7529 or chat with us online to schedule a consultation.