One of the most productive tools used in asset protection and estate reduction without giving up control of your estate.
This type of partnership has 2 classes of partners:
- The General Partners-who make all the decisions for the partnership and control all partnership assets.
- Limited Partners-Receive their portion of the profits from distributions and pay their portion of the taxes of the partnership.
A creditor coming against the Family Limited Partnership cannot touch any asset of the partnership but rather, their only recourse is to put a “Charging Order” on the limited partners’ interest, thus being able to receive any distribution made to that partners and paying any tax liability the partner incurs. This entity is also used as a gifting mechanism to make annual gifts without losing control of the property. This allows those who have estates that are going to be subject to estate taxes. Many people are also using this entity to spread income for tax savings and to take other tax benefits.