Estate Planning Cape Cod MA
Family Limited Partnerships (FLP)
The Family Limited Partnership (FLP) is a more sophisticated estate plan tool used for managing family wealth. It is often used in conjunction with the Irrevocable Life Insurance Trust. It is a powerful tool for consolidating, managing and transferring Family Wealth. This technique is more effective when it is implemented early in your wealth planning. Clients in their fifties, sixties and seventies, with a net worth of $2 million or more, may wish to investigate the merits of a Family Limited Partnership. Family Limited Partnerships offer a number of benefits, but also require more administrative compliance than many other alternatives. Nevertheless, the advantages of FLPs often far outweigh the extra work.
REASONS WHY MANY FAMILIES ARE CREATING FAMILY LIMITED PARTNERSHIPS
√Consolidation of the family assets into a family limited partnership may lead to significant operational cost advantages;
√The use of family limited partnerships many times simplifies annual giving by the patriarch or matriarch;
√Family limited partnerships may be drafted in a manner which facilitates keeping the family assets in the family;
√Use of the family limited partnership provides some protection of family assets from future creditors;
√A family limited partnership may provide some asset protection against failed marriages;
√A partnership agreement is comparatively flexible;
√The family partnership agreement provides greater flexibility in making investments because of the operation of the business judgment rule;
√Many clients desire to have a family limited partnership in order that arbitration can be utilized to resolve family disputes;
√Family disputes with little merit may be deterred by a family limited agreement which adopts the so-called "English" rule (where the losing side pays attorneys fees for the winning party);
√The family limited partnership agreement institutionalizes family communication on family business and financial matters;
√A family limited partnership can save legal costs associated with out-of–state probate; and
√The family limited partnership allows the manager of the partnership assets to follow modern portfolio theory.