"Unlike a traditional limited liability partnership, the partnership agreement establishing an FLP restricts ownership of the partnership units to family members. An FLP is a separate legal entity with its own management structure and tax reporting requirements. What is a family limited partnership?Ī family limited partnership refers to a partnership between 2 or more family members that is generally established for the purpose of operating a family business, managing real estate holdings, or to act as a holding company for marketable securities and other investment types. Lastly, we'll look at how families might leverage them in estate planning strategies to potentially transfer wealth to the next generation.
We will explore the common attributes of both structures and examine how they differ from other entities such as C-corporations and S-corporations. In the following article, we discuss 2 business entity structures that, given the right circumstances, can be appropriate for a family business: family limited partnerships (FLPs) and limited liability companies (LLCs). Thinking longer term, how should a family business be structured to help manage future business operations, potentially reduce estate taxes, and help protect the family from creditors? There are financial, legacy, and family decisions intertwined in a great many choices that you have to make on a regular basis. Maybe you've experienced the joys and challenges of running a family business.
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