The time to plan your family's future is not when you're elderly--it's now. There is no better time than the present to sit down and think seriously about how to ensure the financial wellbeing of your family for generations to come. One possible way to do this is with a family limited partnership.
A family limited partnership is a financial tool that may allow business owners and their families to efficiently handle taxes, business succession and estate planning in one fell blow. In recent years, these partnerships have become increasingly popular among family-oriented business owners. In a family limited partnership, business owners may pass on their wealth to their children while possibly minimizing the impact of taxes.
How it works
If you are a parent, a family limited partnership allows you to transfer assets--perhaps a family business--into a partnership that you form with your children. Because you and your spouse would be considered general partners and your children would count as limited partners, you could retain greater control of the assets. The assets that you transfer into the partnership are generally taxed at a discounted rate because they become more difficult to sell.
How it affects estate planning
Family limited partnerships could be helpful in estate planning if you want to pass down a family business to the next generation but retain some control of the assets and reduce taxes. As you grow elderly and can no longer manage your finances in a hands-on way, you could still have power over the assets in the partnership. When you pass away, it might be possible that a smaller percentage of the assets will be eaten away by estate taxes. That could mean less money in the hands of the IRS and more in the pockets of your children.
Starting a family limited partnership
As you can see, there could be many benefits to opening a family limited partnership. To learn more about family limited partnerships and whether they are right for your children, you should contact a local attorney who is experienced with high-asset estate planning. After all, you have spent so many years working hard to build up your fortune--it is time to take the steps to keep it in the family.