In a Family Limited Partnership there are two types of partners that are involved. These are General Partners and Limited Partners. The General Partners are the ones who actually control the partnership, while the Limited Partners do not have control, they do earn shares of the profits.

You and your spouse may be the general partners through an owned entity such as a corporation or LLC. Most likely, however not always, you will be gifting partnership interests to your children. As general partner, you handle the operation of the FLP and make investment decisions. You may also be entitled to a management fee based on a percentage of the FLP income.

As a limited partner you would own interest in the FLP and share part of the income based on the number of shares owned, but with hardly any control over it. When the FLP is dissolved by the heirs, the property passes to each limited partner based on the number of shares they own.

Contact an estate litigation Attorney for more information on FLP's.

*This blog entry was not written by an Attorney and should not be constituted as professional legal advice.