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Three Questions About the Family Limited Partnership

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					                     Three Questions About the Family Limited Partnership

If you have never heard of the Family Limited Partnership (FLP), you are not alone. This
relatively unknown estate-planning tool can help families save a lot of money from the clutches
of the United States’ gift and estate taxes. If you would like to learn more about the FLP, the
following questions and answers should provide you with a basic understanding of this important
tool.

1. What is an FLP?

Quite simply, an FLP is a limited partnership. The difference between an FLP and a regular
limited partnership is that the FLP is controlled by family members. Just like a limited
partnership, the FLP has two types of partners. The general partner is the workhorse of the
arrangement, bearing all of the liability in exchange for all of the control over management and
investment decisions; the limited partner has no decision-making role in exchange for limited
liability.

2. Won’t it result in double taxation?

No, the FLP is not taxable. The partners simply report the partnership’s income and deductions
on their individual income tax returns, but they do so in accordance with the proportion of their
ownership interest in the partnership.

3. How does this save money on taxes?

The limited partnerships may be transferred to other family members. Therefore, if grandpa
transfers his limited partnership interest to his son, such transfer serves to reduce the size of
grandpa’s taxable estate when it comes to the federal estate tax. Additionally, the transfer of a
limited partnership interest is eligible for the annual gift tax exclusion.

Experienced estate planning attorneys Greensboro NC of the Law Offices of Cheryl David offers
estate planning and business planning resources to residents of Greensboro NC. To learn more
about these free resources, please visit http://www.cheryldavid.com today.

				
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Description: If you have never heard of the Family Limited Partnership (FLP), you are not alone. This relatively unknown estate-planning tool can help families save a lot of money from the clutches of the United States’ gift and estate taxes