A Family Limited Partnership, or FLP, is a type of business entity that offers families the ability to manage and protect their assets while allowing for strategic wealth transfer planning. An FLP is an especially popular option for families with high-value assets like real estate, investments, or family-owned businesses.
Having clearly defined roles within an FLP allows senior family members to maintain control over the assets while transferring ownership to younger generations. If you and your family are interested in establishing an FLP, the estate planning and business formation attorneys at Evans Case are here to offer our legal expertise every step of the way.
Benefits of Using an FLP
There are a number of different benefits that a Family Limited Partnership has to offer, making them an appealing option for families interested in preserving and growing their wealth. Some of the key advantages of an FLP include:
- Tax Benefits: Perhaps one of the greatest benefits of an FLP is its potential to reduce estate and gift taxes. Because the assets are controlled by general partners, the ownership shares can often be transferred at a discounted rate, which helps to reduce the overall taxable value of the estate. This is particularly helpful when it comes to dealing with larger estates, as it gives families the opportunity to pass on their wealth to future generations without incurring unnecessary tax liabilities.
- Asset Protection: Another primary benefit of an FLP is that it provides useful asset protection benefits. Holding assets within an FLP allows families to create a legal barrier between their personal assets and the partnership. This often makes it more difficult for potential creditors to access those assets in case of a legal claim.
- Control Over Assets: General partners retain centralized control over all assets within the partnership. This structure often helps families keep a unified investment strategy and prevents disputes among family members and heirs. It also ensures that all major decisions align with the family’s long-term goals. An FLP allows senior family members to have greater control over investment and management decisions.
- Wealth Transferring: FLPs are an effective and strategic way to ensure that wealth is transferred to future generations. They offer families the opportunity to reduce the estate’s taxable value and retain control over their assets. This is particularly beneficial for business owners and families with large investment portfolios.
There are a great number of advantages that a Family Limited Partnership can offer. Deciding whether or not an FLP is right for you and your family is ultimately your decision. However, speaking with a qualified Denver attorney can help shine a light on all of your options and help you explore all potential avenues. We understand the importance of preserving your wealth for future generations and are dedicated to helping you and your family plan for the future. To speak with one of our trusted attorneys, call Evans Case today and schedule a consultation.
The team of attorneys at Evans Case is prepared to walk you through all of your options and help you decide which formation is best for you. For more information about how our Denver attorneys can properly help you plan for your future, schedule a consultation today.
How to Create a Family Limited Partnership
To create a Family Limited Partnership in Denver, there are some key steps that business owners must take to ensure that their partnership is protected and compliant with state laws. Working with an experienced attorney will help ensure that your FLP is set up accurately and helps you achieve your long-term financial goals. Here is a detailed process for creating an FLP in Denver:
- Drafting the FLP Agreement: The process of establishing an FLP begins with the partnership agreement, which aims to clearly define the roles, rights, and responsibilities of all partners involved in the partnership. It outlines important information like how the profits will be divided, how decisions are made between partners, and what happens in the event that a partner leaves the partnership or passes away unexpectedly. Drafting a clear and thorough agreement is an important step that helps prevent future disputes and keeps the business running smoothly.
- Filing a Certificate of Limited Partnership: The next step in the process is to file the Certificate of Limited Partnership with the Colorado Secretary of State. This document will officially register the FLP as a legal entity in Colorado and provide basic information about the partnership, such as the name, address, and names of the partners involved. The filing process also involves a registration fee.
- Obtaining an EIN: The FLP must obtain an Employer Identification Number (EIN) from the IRS. This number serves the partnership’s federal tax identification number and is required in order to open bank accounts, file a tax return, or conduct other financial transactions on behalf of the business.
- Transferring Assets into the FLP: Once the FLP is registered and formed, the next step is to formally transfer all assets into the partnership. These assets typically include real estate, stocks, bonds, and other investments. Each transfer of assets should be recorded, and the value should be appraised to keep an accurate report of all assets.
- Appointing a General Partner: Choosing a dependable general partner for your business is an important decision. The general partner will be responsible for managing the FLP and making key decisions about managing the assets. The general partner will have control over the operations and be liable for all debts and obligations, so it is highly recommended that you choose a reliable and trustworthy partner.
- Regular Documentation: It is important to maintain accurate and detailed records and file any necessary reports with the state on time. Failure to do so can result in the loss of some of the protections that an FLP offers.
Creating an FLP involves more than just drafting a simple document. There are a series of steps that every business owner and partner should follow in order to comply with state laws and keep their business running smoothly. For assistance creating your FLP, we strongly recommend consulting with one of the estate planning professionals at Evans Case. Our Denver attorneys are well prepared to guide you through the process of establishing an FLP and setting you and your family up for continued success. We understand the importance of preserving your assets and your wealth, and that is why Evans Case has been trusted by Denver families for years to help you protect your legacy. Call today to schedule a consultation and see how we can make a difference.
Call Evans Case Today for Help Setting Up Your Family Limited Partnership
Our approach with each FLP involves a personalized strategy that is tailored to your family’s long-term goals. Our Denver firm is committed to helping families protect their assets and ensure a smooth transfer of wealth from one generation to the next. For more information about how Evans Case can serve you and your family, call us today.
