Home >> Advanced Plans       B.    Family Limited Partnership (FLP) 1.    Primary Features -     i) provides GP a method of control over gifted assets - partnership interests     ii) provides very effective insulation of LP interests from outside creditors     iii) helps reduce patriarch's taxable estate without forfeiting control     iv) must be a bone-fide business structure/operation with 2/more partners     v) must maintain an income-generation objective for LPs 2.    Asset Transfers -     i) most family interests (inc. life insurance) can be held by FLPs     ii) personal residences and IRAs are not suitable transfers     iii) personal-service corporate interests (etc.) are prohibited     iv) outbound income available to GP - salary and partner allocations     v) outbound performance-based distributions to GP also available 3.    Taxable Events / Benefits -     i) provides discounts for minority and lack of marketability LP interests     ii) partnership interests are exchanged for incoming assets - prorata     iii) transfers of appreciated property can incur capital gains tax2     iv) can generate income tax deductions - charitable gifts of LP interests     v) annual exclusion is available for transfers of LP interests to posterity 4.    Management Structures -     i) centralizes management of family-assets potpourri under GP's control     ii) GP does not have to adhere to a strict P/I fiduciary standard     iii) GP essentially determines amounts/frequencies of income distributions     iv) must fail at least 2 of 4 corporate tests - transferability and perpetuity     v) other private formal business forms can be a GP and/or a LP

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