Family Limited Partnership

Chicago Family Limited Partnership | Chicago Estate PlanningA family limited partnership, similar to a limited liability company, divides upon the assets of a business among multiple partners in order to reduce the individual risks, establish vested interests among multiple parties, and harness certain tax benefits. Both types of business models also include general partners and limited partners. A general partners control the management and operations of the business, whereas a limited partner cannot directly influence any business decisions. The limited partners instead holds limited interest in the business, meaning that the partner has lower liability for business actions and less tax requirements. A family limited partnership is unique in that it allows a business owner to allocate his/her business to both general partners and limited partners. This ability allows the business owner to both decide the level of authority in business operations for surviving partners and reduces the taxable estate rates by appointing limited partners.

Family Limited Partnership Benefits

A family limited partnership also serves as an integral estate planning device for businesses and families alike by effectively allowing a grantor to divide up ownership of a business to multiple loved ones. A key benefit to this business structure is the agency of the grantor to allocate the share of the business. This action most notably reduces the burden of the taxable estate during the probate process, but it also can act as a valuable measure to preserve the longevity of the business. By dividing out shares of a business, the grantor can ensure that multiple parties are dedicating time to the interests of the business in return for their allotted profit share. It is important though to note that the Family Limited Partnership can sometimes leave certain parties with far too limited control. The downside to this extreme is that limited partners may not have enough authority to affect smart business decisions or that these parties may not have a large enough of a monetary share to motivate them to make wise business choices. Our Chicago estate planning attorneys provide legal counsel to individuals, businesses and families in the structuring of a Family Limited Partnership in order to promote the life span and success of the business.