Frequently Asked Questions > Family Limited Partnerships (7 entries)

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  • Someone told me I should set up a family limited partnership. How does that work?
    Family limited partnerships (FLPs) can help families keep business assets together and working, even in times of transition such as death or retirement. They are not for everyone and every situation, ...
  • What is an FLP?
    A limited partnership is a type of business organization recognized in Texas and most states where the management rights and responsibilities are vested in one or more general partners while most ...
  • Who typically sets up an FLP?
    Families with business assets which they wish to own in common – including assets which some family members wish to pass on to other family members – may benefit from an ...
  • What type of assets work in an FLP?
    Any type of business or investment assets can work in an FLP. Assets connected with an operating business, such as a store or ranch, work particularly well, but some families establish ...
  • What are some of the benefits of an FLP?
    Among the benefits are: (1) Centralization of Management – An FLP permits ownership to be fractionalized while management remains centralized. (2) Facilitating Intra-Family Transfers – FLPs can make it easier to ...
  • I’ve heard about FLP discounts. How does that work?
    Assets are valued for gift and estate tax purposes at their fair market value – what a willing buyer would pay a willing seller for those assets. FLPs typically have restrictions ...
  • What are some of the drawbacks of FLPs?
    Among the drawbacks are: (1) Organizational costs -- Setting up an FLP typically costs $5,000 or more, so the potential advantages need to outweigh this upfront cost. (2) Operating requirements – ...