Anyone can be sued, so to a certain extent, asset protection is important for everyone. At the same time, there are people who are in certain professions who are particularly vulnerable to legal actions. These would include physicians who are open to malpractice suits, and landlords who can be sued by tenants that are injured on rental property.
There are various different ways that you can protect your assets from claimants, and one option would be the creation of a family limited partnership.
General and Limited Partners
If you create and fund a family limited partnership, you are the general partner. The general partner controls the actions of the partnership.
You can also add limited partners. The limited partners must be members of your family, and these partners are silent partners. They have no decision-making power.
Assets that have been conveyed into a family limited partnership become the property of the partnership, so your personal property is protected if there is a claim against property that is contained within the partnership.
For example, let’s say that you own an apartment building, and you place it into the partnership. The partnership owns the apartment building, so any legal action that comes about as a result of something that took place in the apartment building would be brought against the partnership. It would not be brought against you personally.
As a result, your personal property would be protected.
In addition to the above, if any partner is personally sued, property that is held by the partnership would be protected.
Estate Tax Efficiency
In addition to the asset protection advantages, a family limited partnership can help you gain estate tax efficiency. If you are ultimately going to transfer more than $5.43 million, you are exposed to the estate tax.
Assets can be transferred between partners at a tax discount, and the $14,000 per year, per person gift tax exclusion could be used to distribute shares in the partnership in a tax-free manner. Over time, this could add up, and a significant amount of property could be transferred free of taxation.
Free Report on Family Limited Partnerships
If you would like to learn more about the value of family limited partnerships, we have a valuable resource that you can access through this website. Our firm has prepared a special report that takes an in-depth look at these partnerships, and the report is being offered on a complimentary basis.
To access your copy of the report, click this link and follow the simple instructions: Family Limited Partnerships.
To Schedule a Free Consultation
If you are interested in the possibility of working with our firm after learning these facts, please select our “Workshops” tab to RSVP for a free estate planning workshop. At that workshop you will be offered a free one-hour consultation with an attorney: www.collinslawgroup.com/seminars/
- Who Will Administer My Estate If My Executor Cannot Serve? - July 30, 2021
- What You Should Consider When Creating a Trust - July 27, 2021
- How to Leave Assets for Your Minor Children in Your Estate Plan - July 21, 2021