Family Limited Partnerships!

Wondering what you'll do about an estate tax problem, now that you're thoroughly on your way to accumulating great wealth? Family limited partnerships (FLPs) can be a great tool to pass along assets and your business!

How does it work?

You, the parent, becomes the general partner in the FLP. You transfer your business or financial assets into the partnership and continue to control them. Your children (or trusts for your children) act as limited partners, who receive their share of income from the partnership. You retain control of your assets and your business.

Why would you want to set up an FLP?

The advantages of using an FLP:

• Your children's limited partnership interests are generally valued at less than market value because they have no control over the partnership and have little ability to sell their shares. This can help save on gift and estate taxes.

• At death, only the value of your interest in the partnership (usually 1%) will be included in your estate for estate tax purposes.

• Any future appreciation of the partnership and much of the income will be shifted to your children. If your children are in a lower tax bracket than you, this will reduce income taxes, as income generated by the partnership flows through to your children and is taxed at their rate.

• You retain control of your business and can collect a salary, while transferring ownership to the next generation.

• Your assets are protected by the structure of the partnership.

Feel free to bring this up at our next meeting and we can see if this strategy is appropriate for your financial plan!