Key Takeaways. A family limited partnership (FLP) is a business or holding company owned by two or more family members in which each family member can buy shares in the venture for a potential profit.

Can both partners be general partners?

General Partnership There can be more than one general partner. General Partnerships offer no liability protection for the partners. All partners are held liable if one partner is sued. Many compare the general partnership to a sole proprietorship in this regard.

Who are the general partners in a family limited partnership?

A typical family limited partnership has two types of partners – general partners and limited partners. General Partner: One or more members of the family are named as general partners. They will have unlimited liability, just like a sole proprietor, so if the project fails, their personal assets are fair game for creditors.

Who are permitted transfers in family limited partnerships?

“Permitted transfers” were transfers (1) to any member of the transferor’s family, (2) to the transferor’s executor, trustee, or personal representative to whom his or her interest would pass at death or by operation of law, or (3) to any purchaser, but subject to the right of first refusal held by the certain partners.

How does a family limited partnership reduce estate tax?

An FLP can provide estate tax savings because the value of FLP interests are reduced as a result of the limitations placed on a limited partner’s ability to control the operations of the partnership. However, special structuring is required to accomplish this. [See §§9:40 et seq., 9:101.

How can a GP be removed from a limited partnership?

The LPs could remove the GP by written agreement of the LPs owning 75% or more of the partnership interests held by all LPs. If the partnership terminated by reason of the GP’s removal, then 75% of the LPs could reconstitute the partnership and elect a successor GP.