The general partners manage the assets contributed to the family limited partnership. Limited partners generally have no rights to the assets held by the FLP. Lack of marketability and fractional ownership of limited partnership interests held by limited partners are two of the well-established abatement principles that decrease the value of taxable assets. The discounts allowed by restricted rights provide for the reduction of the value of assets held by each limited partner, but also increase the amount of annual tax-free gifts that can be achieved. Today’s high marginal estate tax rates allow for the wise and prudent planning that is necessary to preserve family wealth.
Centralized management of family assets
When a corporation is used as a general partner, the general partner controls all of the assets of the partnership. This corporation can also employ family members and other people. It will convene meetings, conduct training sessions and facilitate asset management. With a corporate general partner, continuity must be ensured even in the case of husband and wife.
By using an FLP, the time and expense of proving an estate can be greatly reduced. When a living trust is also used, then there is no probate. Living wills are not a public record and therefore no one other than those involved in the family knows their content.
Heal title defects
The procedure for transferring assets to an FLP can help with the discovery of title defects. This can be a significant problem for real estate assets if it is not discovered and corrected.