Family Limited Partnership For Estate Planning

Family Limited PartnershipOver the years, our Charleston estate planning attorney has found that establishing a Family Limited Partnership (FLP) can be a powerful Charleston estate planning tool.  The FLP allows business owners or family members to allocate certain interests of ownership to a specific asset(s), most often real estate, to several beneficiaries. In essence, the family limited partnership is structured similarly to a limited partnership entity.  This estate planning mechanism also enables the business owner or family members to differentiate each partners interest in the family limited partnership into two categories: general partners and limited partners. General partners have the unique ability to make business management decisions and influence partnership operations regarding the assets held in the FLP. Meanwhile, limited partners remain passive and are prevented from directly influencing business decisions. These protections maximize asset protections through the FLP’s limited liability.  One of the most obvious benefits of the limited partners comes in the form of reduced estate costs during the estate disposition. In other words, limited involvement of limited partners can result in considerable tax-benefits and asset protections for the limited partner and the business alike.

Family Limited Partnership for Real Estate

It is not unusual for partners of a Charleston family limited partnership to transfer a residential real estate property, commercial real estate property, or other real property asset that is not readily divisible into a Family Limited Partnership.  Often, beneficiaries do not want to take on the responsibility of managing the real estate on their own. Instead, a property owner can allocate certain ownership percentages of a real estate property– usually a beach house, summer home, or a secondary investment property– to multiple family members so that the duties, obligations of management are not burdening one individual.  In many cases, this estate planning strategy may reduce the income tax liability of the partners, specifically limited partners, and preserves the well-being, management of a real estate.

For more information about employing a family limited partnership as part of your estate plan, please contact one of our Charleston estate planning attorneys or Charleston real estate attorneys by completing an inquiry form, email or calling our office at 843-564-5115.