How does a Family Limited Partnership work?

A Family Limited Partnership (FLP) is a legal entity that may hold property, including cash, real property, a business interest, or other assets. Like any limited partnership, there are general partners and limited partners. In an FLP, senior family members act as general partners and have a greater role in the management and control of partnership assets. As limited partners, younger family members have less authority over the partnership but retain a greater share of FLP property. The FLP, then, is a tool to pass wealth to younger generations while reducing the taxable estate and tax liability of the transferring generation. Family Limited Partnerships are frequently used to move wealth from one generation to another. Partners are either General Partners or Limited Partners. One or more General Partners are responsible for managing the FLP and its assets. Disadvantages include the massive amount of paperwork required. Consult a board-certified attorney to ensure your family limited partnership is set up correctly.

Call the Law Offices of Debra G. Simms at 386.256.4882 to learn more. We are currently offering free consultations via video conference to assist you with your needs.

This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.

 

What constitutes a “gift” for the purpose of the estate and gift tax?

The IRS interprets a gift very broadly, so that a gift may include any transfer of property or assets, or the use of income-producing property, without expecting something of equivalent value in return. Even selling something to another may be considered a gift, when it is sold at less than full value. An interest-free or below-market loan may also create a gift for gift tax purposes.

Fortunately, taxpayers may make annual gifts to individuals without the gift incurring any gift tax liability, up to the annual gift tax exclusion amount. This amount can be doubled when the gift is split between spouses. Gifts made within the annual exclusion do not reduce the available lifetime credit under the estate and gift tax, and they can be made every year. Moreover, certain gifts, such as direct payments to qualified education institutions or health care providers, are not counted at all toward the gift tax, regardless of the amount. Preparing and filing a gift tax return will be required under certain circumstances.

Call the Law Offices of Debra G. Simms at 386.256.4882 to learn more. We are currently offering free consultations via video conference to assist you with your needs.

This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.

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