If you have been considering different ways to manage and protect your assets, you may have considered a family limited partnership. If you are curious about the benefits a well-drafted family limited partnership can provide for you, consider these frequently asked questions and answers.
What is a family limited partnership?
A family limited partnership is a legal entity that allows for a grouping of individuals who maintain a central financial interest. Limited partners are not in charge of management, but the general partners may make decisions regarding finances. In fact, limited partners have no legal say in what happens with the assets involved. They act more as beneficiaries.
What are the benefits of a family limited partnership?
This arrangement makes it easy to move wealth and other assets from one generation to the next. Additionally, this entity allows family members to pool all their resources together with a common goal. This lowers the costs associated with legal fees and risky investments. Plus, it is considered efficient in terms of taxes and other fees.
Are there risks associated with a family limited partnership?
Typically, no risks are associated with limited partners. They have no liability or risk beyond the initial investment.
How do I begin a family limited partnership?
Structuring your family limited partnership begins with determining the needs of your family. You can then speak with a lawyer about drafting a written limited partnership for members of the family. Keep in mind that homes and life insurance policies are not transferable via this arrangement.
Are you interested in learning more about the effects a family limited partnership could have for you? Contact us to learn more about your options.