In most Family Limited Partnerships, the parents (or an entity that is owned by the parents, such as an S corporation) are designated as the general partners, either concurrently or successively. This allows them to maintain control over the partnership assets. The children and/or grandchildren are designated as limited partners. The parents can also own limited partnership interests and are capable of transferring some or all of their interests to their descendants over a period of time through gifts or other means to save estate and income taxes. If the parents no longer want to serve as general partners, the position of a general partner can be passed on to someone else, thereby providing a continuity of management and family training.

The Family Limited Partnership is a practical vehicle for consolidating assets and providing long-term accumulation of wealth while at the same time affording a positive method of control. In general, assets such as real estate and/or marketable securities can be transferred to an FLP on a tax-free basis. The FLP prevents having to divide the assets to heirs at death, including the real estate and/or marketable securities, since the heirs inherit an interest in the FLP, not the specific assets themselves. The FLP also eases transfer of assets by gift or other ways, since partnership interests are transferred rather than undivided fractional interests in real estate or specific shares of stock.

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