Family Limitied Partnership

Over the past five years, the Family Limited Partnership (FLP) has risen from obscurity, as a little known tax loophole, into the preeminent vehicle for asset protection and estate planning. A recent article in Forbes extolling the benefits of the FLP—headlined "Cut Your Estate Taxes in Half"—claimed that individuals were successfully using this technique to discount the value of their estate by up to 90 percent.

In this section, we will discuss the features of the Family Limited Partnership which provide remarkable advantages and planning opportunities. By itself, or in combination with other techniques, the FLP can be used to create a powerful strategy for asset protection and for realizing estate tax and income tax benefits. We will start with the background on this technique.