Family Limited Partnership

Posted on December 8, 2010

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Sometimes an elder gifts interests in a family home to their kids, but another way is to transfer the property in a family limited partnership, a sort of limited liability company (as Family Limited Partnership is not an actual legal term) In a FLC, no family member has a direct interest in the property, and so it is protected from liens coming from liabilities of the various partners.

In other words, if one of the members is sued, or runs up debt, this cannot be billed against the LLC, just like a trust fund. Income or loss flows through to the members of the FLP, and is taxable.

Assets are transferred into the partnership somewhat similarly to a charitable trust in that the elder can infuse cash or investments into the partnership, and then transfer a lesser percentage of the interests to their children and grandchildren, and not be taxed for the full amount as a portion of the assets are given to the kids. Conceivably, a $100,000 FLP could be taxed at a third of the actual amount as various people are benefiting from the partnership.

See http://www.Axsmith.net for more details.

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