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We form it, service it,
and consult on its use.
Our FLP is a truly asset-protected
partnership
customized to you,
not the generic FLP out of a box that
other companies give you.
Easy and
Convenient Total Asset
Protection For You, Your
Family,
Your Business.
We do
everything to form the FLP and
move assets into the FLP for you.
We give you
unlimited consultation
so you always know how to use and
maintain it. Set it and forget it!
Our Family
Limited Partnership can allow you to:
-
save self employment taxes
-
save future
estate taxes
-
prevent
lawsuits
-
keep control
of your assets
-
avoid
fraudulent conveyance
What is a family limited partnership?
The FLP is one of the most effective asset
protection tools
around. It helps reduce estate taxes, gives you the ability
to manage
your assets while denying creditors
access to
them, and has a built in tax
penalty for any creditor who
receives
a court order against you.
In a FLP
you name one
or more general
partners
and one or more limited partners.
General partners can be yourself or
a corporation or your
spouse or other
family member. Limited partners can be LLCs,
spouse, grown children, etc. General
partners are in
complete control while
limited partners have no control. The
law denies the creditor the right to
take any interest in
the partnership,
and if structured properly they can provide
great anonymity. The FLP is the most
widely used and
effective domestic
asset protection tool around.
Family Limited Partnerships are used
to protect real estate,
stocks & bonds,
cash, jewelry, furniture and fixtures and
many other personal and business assets.
The
FLP is unique
in that it is a tax-neutral
entity. Thus, unlike a
corporation you can
normally freely transfer assets in and
out of the FLP without worrying about
an adverse tax effect.
So, How does it work?
The first thing to do is properly form an FLP
that is
structured to your specific needs.
his takes some important
planning.
Second, the partnership agreement
has to be drawn
up and the ownership
carefully decided. Third, the assets
have
to be properly transferred into the FLP.
We do all of
this for our clients.
Once all of this has been done, it becomes
very
hard for a
creditor to attack your FLP.
Even if he
sues and gets a
court judgment
against you, that still does not give him
the
right to take your assets
in the FLP.
He has to go back to
court and get
another judgment called a charging order.
That
allows him to get your share of the
distributions
from the FLP, but not the
assets. If you do not distribute anything,
then the creditor gets nothing. He
cannot take your position
and run the FLP.
He cannot force you to distribute assets.
The rights of an assignee of an FLP
interest are much more
limited than are
the rights of the assignor partner.
If the FLP has undistributed profits,
the creditor
gets a K-1 and
must pay
tax to the IRS on money
he never received
and
probably never will receive.
As a result of this, few
creditors ever go
for a charging order. Thus your assets
are
safe! See IRS Rev Rul. 77-137,
977-1 C.B. 178.
FLP Is Confidential
Your
partnership agreement is confidential
and is not filed with
any government
agency. Only you know what it says
and only
you know who the limited
partners are and what assets are
owned by the partnership.
An FLP
does not have double taxation like a corporation. It is
truly an excellent domestic protection tool when it is
properly structured
and implemented.
When setting up an FLP and moving
assets into it, if
possible you try to avoid
mixing risky assets with safe
assets.
A risky asset is one that is likely to generate a
lawsuit and a safe asset is one that is
unlikely to generate
a lawsuit. Examples
of risky assets are rental property,
boats,
airplanes, cars, stock in closely held
corporations
etc. Examples of safe assets
are cash, stocks and bonds,
home
equity
personal
assets etc. Most ideal is to form both a
LP and
LLC (both in Nevada for the privacy
and asset protection),
use the FLP to
protect
your home and accounts, and the LLC to
protect
investment real estate.
It is not advisable to put your personal
home that you
currently live in into
an FLP. To do so may
result in the loss
of deductions and valuable capital gains
treatment upon the sale of your home.
Instead, you use the FLP to
strip
the
equity in the home to protect it. Property
transfer
can be done for investment real estate.
The FLP
can serve as umbrella protection
for all your businesses
and any of your
family members – spouse, children, parents,
etc. If you want the partnership assets to flow through for
estate planning, you can name your revocable living trust as
99% owner
of the partnership.
Note:
Especially in a state like
California, use of an out of
state partnership
such as a Nevada
or Wyoming LP in
which assets are not carefully transferred
in, can trigger
Proposition 13
property reassessment
and higher taxes. Regardless of where
you live, you should never try to transfer
assets into a LP
by yourself. We do the
transfers for clients in such a way
that
it is a tax-neutral transfer.
We advise you on
what assets are best
to put in your FLP, and what assets are
best protected in another structure.
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