Trusts are valuable tools to protect your estate. However, trusts do not allow you to protect your assets while you are still alive. In order to secure what is rightfully yours and protect your assets, you will need to begin thinking outside of the box.
Many individuals and couples turn to Family Limited Partnerships (FLPs) as an advanced asset protection measure to do so.
Here is a brief overview of what FLPs are and how they can benefit your family.
What Is A FLP?
Family Limited Partnerships are much like foundations. As the creator, you will be named as a general partner. As a general partner, you will contribute assets to the FLP and take over management. Family businesses and securities are two examples of assets that you can contribute.
As a general partner, you have the ability to give family members equity as limited partners. While both general and limited partners can pool assets into a FLP, only the general partner or partners will oversee management.
Consider The Benefits Of A FLP
Two benefits of this type of partnership involve estate taxes and asset protection.
When you place assets into a FLP, you no longer own them. As such, they will not be subjected to the federal estate tax when you pass away. This can ensure that more money goes to your heirs than the government.
In addition, assets held in a FLP are protected from creditors and ex-spouses.
To create a FLP, you will need to prepare and file a Certificate of Limited Partnership with the Secretary of State and create a limited partnership agreement. In order to make the most out of a FLP, it can be a good idea to contact a seasoned estate planning attorney to discuss your asset protection goals.