Scranton Family Limited Partnership Lawyer
For high income individuals and families, there are many asset protection tools and strategies to pass down wealth. We recommend speaking with an attorney about your options, because an experienced asset protection attorney will always be able to save you more than if you were to go without legal assistance. Here at the law offices of Haggerty Hinton & Cosgrove LLP, our Scranton family limited partnership lawyers pride themselves on finding and creating individualized solutions for each and every one of our clients when it comes to estate planning.
Do You Need to Shield Your Assets?
The federal estate tax is $11.4 million for an individual, and double that ($22.8 million) for a couple in 2019, according to the Internal Revenue Service (IRS). As such, the vast majority of Americans do not need to worry about estate tax. Only 0.1 percent of the population has enough wealth to be taxed at death, according to Tax Policy Center. However, for those that have a high level of wealth, it is common to employ a variety of tax-saving methods, including trusts and gifting, to reduce the size of a large estate. One of these asset protection tools is a Family Limited Partnership (FLP).
What is an FLP?
A Family Limited Partnership allows family members to pool their finances together in order to create a business or to easily gift large sums of money in order to reduce the size of an estate. An FLP works as such:
- You put up to $15,000 per family member into the FLP per year, which is the federal tax exemption limit (this money is not taxable);
- Revenue earned from the FLP goes to the family members, and is no longer part of your taxable estate; and
- This reduces your estate year by year, and allows simple, tax-free gifting to your beneficiaries and family.
The person who creates the FLP is called the General Partner. The General Partner is the party that puts their wealth into the FLP for the purpose of cutting their estate down to under the federal tax limit (or getting as close as possible) and is the party who controls where those finances go and even how they are managed and used. General Partners can intervene when money is mismanaged. A Limited Partner could be, for example, a child, nephew, or sibling—family member or members who the assets are gifted to.
Example of How an FLP Can Reduce the Size of Your Estate
When it comes to Family Limited Partnerships, the longer they are up and running, the more money they can gift tax-free. For example, if you have ten family members (children, grandchildren, nephews, and siblings) who can be part of the FLP, you could gift a total of $150,000 per year tax-free to the FLP. That number is doubled to $300,000 if you are married. In just a few years, you could reduce a taxable estate to an estate that falls under the federal estate tax limit.
Call Haggerty Hinton & Cosgrove LLP Today
Our FLP attorneys can help you decide whether a Family Liability Partnership is right for you and your family. Reach out to the Scranton law offices of Haggerty Hinton & Cosgrove LLP today at 570-354-5205 or contact us at your soonest availability to set up a consultation.