225 W 520 N Orem, UT 84057
Mon - Fri 8:00-5:00 Sat-Sun CLOSED
855.361.2686

Legal Wisdom

The latest updates from Legally Mine

Legally Mine – FLP’s and Homes

A “Family” Limited Partnership (FLP) is a Limited Partnership where most of the partners arc members of the same family group. In 2004, a U.S. Court of Appeals held that family members can enter into valid Family Limited Partnerships. A variety of other courts have also noted that there is no distinction between a Family Limited Partnership and any other type of Limited Partnership, and FLP’s can hold and protect a home. In a typical FLP, someone in the family, or corporation or limited liability company they control, acts as the general partner so that control is retained by one or more family members. If a FLP operates a family business, the parent that manages the business could serve as the general partner and the children,          spouse, or other family members could be limited partners. If the FLP is used to own        family investments, the spouse with the least risk and the children are often limited partners, while both spouses, or their trusts, would otherwise be the general partners.

You should make certain that in placing a residence into a FLP that only those holding title to the residence are the initial owners of the FLP, and that they own both in the same percentages of ownership. This is because in recent years the IRS has scrutinized the FLP for valuation, estate, and gift tax purposes. These questions, however, only arise if there has been a “transfer” as defined in the federal tax laws. No gift tax is imposed if a taxpayer makes a transfer to himself. And, where a taxpayer contributes property to a FLP which he owns in the same percentage as he owned the contributed property, there is also no gift tax, since there is deemed to have been no “transfer”

Image

 Legally Mine, Dan McNeff,

0 comments

Add comment