A Family Limited Partnership (FLP) is a business structure where family members combine assets for investment or business purposes. It helps protect personal assets, reduce taxes, and support estate planning and business succession. FLPs are often used to maintain family control of assets across generations.
An FLP operates like a standard limited partnership, with at least one general partner who manages the business and assumes full liability, while limited partners have no management authority but are protected from business debts.
In an FLP, family members contribute assets in exchange for ownership shares. Typically, parents or senior members serve as general partners, managing operations, while children or other relatives act as limited partners and share in profits.
Over time, parents can transfer ownership by gifting FLP shares to their heirs, reducing their taxable estate while maintaining control. FLP interests may also qualify for tax discounts due to limited marketability and control.
The partnership agreement outlines income distribution, partner roles, and ownership transfer rules, often restricting sales outside the family to preserve long-term asset ownership. Limited partners can eventually become general partners as part of succession planning, ensuring smooth wealth and business transitions.
Read more about ways to use a Family Partnership and find out if it's right for you.
If you would like to talk with an attorney about a business partnership structure, give us a call at 605-275-5665. We offer free consultations.