A partnership structure used to transfer wealth within a family while retaining management control.
A Family Limited Partnership (FLP) is an entity formed by family members to hold and manage assets — typically investments, real estate, or business interests. The senior generation typically serves as general partners (maintaining control) while transferring limited partnership interests to the next generation.
FLPs serve several purposes:
Wealth transfer: Limited partnership interests can be gifted at discounted values due to lack of control and lack of marketability, reducing gift and estate taxes.
Asset protection: Limited partners' interests are generally harder for creditors to seize than outright asset ownership.
Centralized management: The general partner maintains investment and distribution decisions regardless of how many family members hold interests.
FLPs require careful structuring and legitimate business purpose to withstand IRS scrutiny.
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