As a small business owner, you should consider the importance of asset protection when creating your financial plan. We live in a litigious society where there is no shortage of people looking for targets. Taking the necessary steps to protect your assets will go a long way in not becoming one of those targets. Family Limited Partnerships should be taken into consideration as one of those steps.
Family Limited Partnership (FLP)
Anyone can be sued, but people who are involved in certain businesses are particularly vulnerable. From the slip and fall cases against store owners, to the disgruntled tennant vs. the landlord, to the ever popular “deep pocket target” – doctors, a Family Limited Partnership (FLP) could potentially provide an asset protection solution.
When you create a FLP, you serve as the general partner. As the general partner, you can name people in your family to act as limited partners. The general partner is the only partner with decision-making authority, so you would be in complete control of the decision-making process.
When you place a business that you own into the FLP, it is no longer in your direct personal possession. As a result, your personal assets can not be targeted if someone files suit against you for something that happens in your business.
If anyone else in the partnership is sued, the assets in the partnership would not be in play, yet another asset protection benefit that you gain when you create a FLP.
A Family Limited Partnership can be of great value if you are a business owner looking for asset protection solutions. Value can also be found in a FLP by those who are exposed to death taxes. Assets can be transferred to members of the partnership at a tax discount. You can potentially use the annual gift tax exclusion to provide family members with shares in the partnership without incurring any transfer tax liability.
About Oakstone Law, PL
Oakstone Law PL was founded by Bob Kleinknecht. A member of the Florida Family Trust Company Subcommittee, the Estate Tax & Trust Planning (ETTP) Committee and the Real Property, Probate & Trust Law (RPPTL) Section of the Florida Bar, Kleinknecht has 15 years’ experience.
Prior to founding Oakstone law, he spent more than eight years serving as a personal, in-house estate, tax and charitable planning attorney for a Forbes 400 family in New York and Florida. Before that he was an estate planning and estate settlement attorney with prominent firms in Boston and Washington, D.C. after beginning his career with a boutique firm in Naples, Florida.
Licensed in Florida and Massachusetts, Kleinknecht has developed a practice model that eliminates billing by the hour and offers a streamlined, customized client process supported by technology, security and a personal approach.