The family limited partnership's assets are managed by the general partner or partners. In general, limited partners have no rights to the FLP's assets. Two well-known reduction principles that reduce the taxable estate's worth are the lack of marketability and the limited partners' partial ownership of the limited partnership interests. The discounts permitted by the restricted rights reduce the value of the assets held by each limited partner while simultaneously enabling greater yearly tax-free gifting. The ability to plan carefully and prudently, which is required to protect the family's wealth, is made possible by the high marginal estate tax rates that are currently in effect.
Centralized Management of Family Assets
When using a corporation as the general partner, the general partner controls all of the assets in the partnership. This corporation can also employ family members and others. It will call meeting, conduct training sessions and facilitate wealth management. With a corporate general partner, continuity must be ensured even in the event of the husband and wife.
Minimize Probate
By using an FLP, the time and expense of probating an estate can be greatly reduced. When a Living Trust is also used, then there is no probate. Living Wills are not public record and therefore no one but those involved in the family know of its contents.
Cure Title Defects
The procedure for transferring assets to an FLP can help with the discovery of title defects. This can be a significant issue for real estate assets if not discovered and corrected.