I have been hearing a lot about Family Limited Partnerships and how good they are. I am looking for some information about them.
How are Family Limited Partnerships better for holding Real Estate?
How do these protect you more then a traditional LLC??
Your comments are welcome.
Thanks,
Joe.
Family Limited partnership are an estate planning tool to transfer wealth from parents to children without giving up control of the assets. Limited partners have no say in the operation of the business and enjoy limited liability from the business’s creditors. The general partners have full personal responsibility for any debts of the partnership.
The advantage lies in the lack of marketability for the limited partnership shares and the discount that follows. You and your spouse could transfer 40K of a value gift tax free to each child per year. Transfers of LLC memberships do not have a discount and voting rights of the shares pass with the transfer. i. e. giving away the LLC interests is giving away control.
LLCs have an advantage over LPs because managers of an LLC are not automatically liable for LLC debts in the same way general partners are responsible for partnership debts. However, this advantage is moot if there is only person who runs the business.