A family limited partnership (FLP) is an estate preservation strategy families often employ to move wealth and assets between or across generations while protecting the assets from high estate taxes. Setting up an FLP will generally involve family members joining the group as general partners or limited partners. One or more general partners assume liability for managing investments and disbursement of assets.
In addition, the attorneys at Herzog Crebs LLP will discuss with you the benefits of establishing a Family Limited Liability Company (FLLC), which is also an estate preservation strategy families often employ both to transfer wealth between generations and protect from estate taxes, but also as a means to help manage family assets like vacation homes, family farms, or interests in closely held businesses.
In both FLPs and FLLCs, the older generations maintain management of the FLP or FLLC with children or grandchildren owning partnership or memberships in the FLP or FLLC, but not having management or voting rights. This allows the older generation to buy, sell, trade or distribute the assets in the FLP or FLLC, while the other partners/members are restricted in their ability to sell their interests, withdraw from the FLP or FLLC or transfer their interests. In this way, the older generation maintains control over the assets and can protect them from financial decisions made by younger members.
Benefits of establishing a FLP or FLLC include:
- Protecting personal assets from creditors and possible litigation
- Reducing or possibly eliminating estate inheritance taxes upon the death of the general partners or older generation
- Reducing income taxes on ongoing earnings reinvested into the FLP or FLLC
- Creating a family wealth management strategy between generations, where the younger generation can learn the investment and wealth management strategy of the older generation
- The last thing parents and grandparents want is to think that the family farm or family vacation home they have been enjoying will cause a dispute between children and grandchildren upon their deaths. For FLPs and FLLCs that own family vacation homes and family farms, having the property held in a FLP or FLLC allows for families to work together to develop policies for keeping real estate in the family for future generations
Learn More About the Advantages of a Family Limited Partnership and Family Limited Liability Companies
The estate planning and asset preservation team at Herzog Crebs LLP has extensive experience setting up family limited partnerships and family limited liability companies for individuals and families in Missouri and Illinois. To learn more about how FLPs and FLLCs can benefit your family as part of a comprehensive estate planning strategy, schedule a consultation at one of our convenient offices in St. Louis, Belleville, or Edwardsville.
Contact us by phone or email to request a return phone call to schedule a consultation.