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Chapter 1. Asset Protection > Family Limited Partnerships

Family Limited Partnerships

A Family Limited Partnership is a valuable estate and financial planning vehicle, which also has significant asset protection capabilities. A Family Limited Partnership is an arrangement that permits the division of the partnership’s interest between those partners designated as limited partners and those partners designated as general partners. General partners are those partners or entities, such as trusts, that manage and control the partnership’s assets and actions. Limited partners have no say in the ordinary operations of the partnership and have no personal liability beyond their interest in the partnership for any of its debts. Portfolio management of investments may be the business of the partnership.

Establishment of the Partnership

A Family Limited Partnership is established by a general partner or partners having a general partnership interest in a small amount, usually between 2% and 5% of the value of the partnership. A trust may be the general partner so that you can avoid probate and reduce estate taxes on the general partner’s interest. The remaining interest in the partnership is held by the limited partners. The general partner may also be a limited partner. In a family setting, often the parents will be the general partners and give limited partnership interests to their children.


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