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Virginia Beach Estate Planning Lawyer / Chesapeake Family Limited Partnership Lawyer

Chesapeake Family Limited Partnership Lawyer

If you have a family business, you may plan for future generations to take over its operations in the event that you retire, pass away, or become incapacitated. Creating a Family Limited Partnership (FLP) is a great way to protect assets while minimizing overall estate and gift taxes.

Married couples with business interests can also establish an FLP to provide their children with limited-partnership interests. Due to the fact that property is removed from the estate of general partners, it can reduce future estate taxes while allowing the general partners to control the FLP and the assets. Limited partners can also reap the tax benefits of an FLP while also receiving distributions. To learn more, read on and contact our Chesapeake family limited partnership lawyer at The Law Office of Angela N. Manz.

How Does a Family Limited Partnership Protect Assets?

An FLP can ensure that your business is protected for your family. Another benefit of FLPs is the asset protection they provide. Any assets that are kept within the partnership are protected from creditors that may try to recover debt from the limited partners. The business interests in an FLP are also easy to divide among family members. You can transfer ownership of the business to future generations so they can continue operating the company.

Using an FLP to Gift

When an FLP is properly established and maintained, an FLP can also reduce the value of gifts to children. The value of every business interest reduces the value of the taxable estate. If you use an annual gift tax exclusion, there may not be any gift tax on the transfer.

Tax Issues to Consider

FLPs do provide substantial tax benefits and so, they are closely scrutinized by the IRS. For this reason, it is critical to make sure your FLP is established and operated properly. The following issues are just a few the IRS may consider when determine if an FLP is viable:

  • The FLP is not solely for tax purposes: You have a better chance of avoiding a challenge from the IRS if you can prove there are legitimate and significant reasons for establishing the FLP other than to minimize taxes.
  • Keep it professional: Transferring your home or vehicle into the FLP will likely result in an FLP challenge. Likewise, you also should not use the assets within an FLP to pay for personal expenses.
  • Have the FLP professionally appraised: Family members or partners should never determine the value of assets placed into an FLP. The IRS is less likely to scrutinize these assets when a qualified appraiser has valued them.
  • Limit assets: It is tempting to place as many assets as possible into an FLP to maximize the tax savings and asset protection benefits. However, if the IRS successfully challenges the FLP, a significant portion of a partner’s net worth could be susceptible to lawsuits or taxes.

Call Our Family Limited Partnership Lawyer in Chesapeake Now

At The Law Office of Angela N. Manz, our Chesapeake family limited partnership lawyer is dedicated to helping clients make informed, education decisions about their assets. We can put that expertise to work for you, too. Call us now at 757-271-6275 or contact us online to schedule a consultation and to learn more about how we can help.

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