Part Three

Within their limitations, Family Limited Partnerships (FLPs) should play a role in a family’s estate and asset protection planning. Here are few simple rules about correctly using FLPs:

Avoid moving offshore – In order to generate higher fees, there are some promoters who encourage Limited Partnership interests are transferred to offshore trusts. These promoters will l not tell you that for this arrangement to work you will probably have to leave the country in order to avoid being taken to jail for contempt of court. They will also not bother to tell you that case law establishes no advantage to have the Limited Partnership interests in foreign asset protection trusts as opposed to arranging well thought-out, structured and drafted domestic trusts.

Avoid buying kits and asset protection promoters – If you have enough in assets to justify having a Family Limited Partnership, then you should take the time to talk with a licensed tax attorney having experience in properly structuring these and assisting you with transfers to the FLP. Family Limited Partnership “kits” and these one-size-fits-all promoters invariably cause problems, which means that there will be additional costs to both fix past problems and finally do it right.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.