FLPs FAMILY LIMITED PARTNERSHIPS (Please read if your estate is worth a million!) Is your estate currently valued at $1 million dollars or more? You could greatly benefit from implementing an asset protection plan utilizing a Family Limited Partnership (FLP). The FLP is fast becoming the most popular device to reduce estate and gift taxes, fund tax shelters, and provide protection against liabilities. The FLP works very well in conjunction with an existing revocable living trust and should be implemented with an RLT in the event you do not have one. An FLP, acting without an RLT, will work, but the entire estate with go through probate and be subject to court-appointed guardianship in the event of incapacity. The FLP effectively reduces estate and gift taxes by 30-40%. This is of utmost importance for MRLANDLORD.COM subscribers and visitors, because this savings would result in several hundred thousand dollars in tax savings. The tax reduction is accomplished by the owner(s) transfering title to most or all of the assets of an estate into the FLP and allocating 90% of those assets to the limited partnership interests. The owner(s) initially own all of the limited partnership interests as well as all of the general partnership interests. The general partnership interests are then transfered into the RLT which is also controlled by the owner(s). The limited partnership interests are then transfered into children's names, an irrevocable trust tax shelter, or the RLT as appropriate to accomplish the plan and depending upon the size of the estate. The portion of the estate owned by the limited partnership interests is devalued by the IRS pursuant to the Treasury Regulations valuation standards. The reduction in value is usually 30% for highly liquid assest and 40% for real estate and other harder-to-liquidate assets. The FLP creates a unique opportunity for those with large estates to fund tax shelters. Traditionally, irrevocable trust tax shelters, the most popular estate tax shelter, have been difficult to fund without incurring a gift tax. With the use of Crummey letters, individuals can transfer $10,000 per year per trust beneficiary into the tax shelter. A family of four could therefore only transfer $40,000 per year into an irrevocable trust tax shelter ($10,000 per donor per donee). However, if the same family transferred limited partnership interests in an FLP into the tax shelter, $52,000 to $56,000 is effectively transferred tax free into the shelter (because of the devaluation reduction). In addition, since the Crummey letters make some parents nervous that one of their children will exercise the right to withdraw the $10,000 gift from the trust, if the gift is in the form of an FLP interest, than the underlying interest is still in the control of the grantor. Because of that feature, many taxpayers are now adding Kristofani beneficiaries to their tax shelters to leverage the Crummey powers without any risk. One family I work with transfers $500,000 per year into an irrevocable trust tax shelter using FLP gifting to Kristofani beneficiaries. The FLP is also a very effective device to guard against creditors, liabilities, and lawsuits. All of the value of the estate that has been transferred into limited partnership interests can be protected from liabilities of the owners. If the liability is incurred after the creation of the FLP, the creditor cannot look to the underlying asset from satisfaction of the liability. For those who wish to use the FLP for this purpose I recommend that an LLC be utilized in conjunction with the FLP as well as the RLT. The LLC is placed in control of the FLP as its general partner so that the personal liabilities and actions of the owners do not affect the control of the FLP assets. The RLT then owns the LLC as well as the limited partnership interests that are not transferred to children or tax shelters. Working with mrlandlord.com, you retain a group of professionals, including a team of attorneys to create your FAMILY LIMITED PARTNERSHIP at a low price. Each FLP is individually prepared for each rental owner based on their real estate, other assets and unique individual facts. This site provides the only place on the Internet where you can order a FLP where we specialize in working with rental property owners and understand the need of asset protection for your rental real estate. After we receive your request for a FAMILY LIMITED PARTNERSHIP 1) Someone will follow-up by phone and/or send you a questionnaire to get all the needed data from you to prepare your estate plan. We will also inform you of any documents (copies) related to assets that may be needed. 2) Once we get your information and copies of any needed documents, we will take 7 to 14 days to send you a draft of your FAMILY LIMITED PARTNERSHIP and documents to make whatever modifications you wish and then return to us. 3) After we receive your modifications and approval, within 7 to 14 days, we will mail to you, by priority and certified mail return receipt requested, your complete hard copy set of your FAMILY LIMITED PARTNERSHIP legal documents with instructions for signing and completing the project. Let me stress again, if your estate is worth a million or you have plans for your estate to grow, order your FAMILY LIMITED PARTNERSHIP now. Get your ducks in a row! Click here to order your FLP online.