Family Limited Partnership
Estate Planning Attorney in Grand Junction
Protecting Large Estates from the Federal Estate Tax
For those with a high net worth, estate tax avoidance is critical to preserving assets, e.g. a farm, ranch or family business for future generations. Although there are several means to accomplish this objective, you will need the help of an experienced and skilled Estate Planning attorney to avoid the many pitfalls.
In recent years the estate tax has ranged from 38% to 55% for estates that are subject to the federal estate tax. However, for 2013 the federal estate tax exemption will be $5,250,000 and the tax rate will be 40% for sums above those figures.
The Use of a Family Limited Partnership
Family Limited Partnerships (FLP) are business entities comprised of two classes of partners: "General Partners" who operate and control the partnership and "Limited Partners" who have no voting rights, but are entitled to profits based on their percentage of ownership. With an FLP, the parents typically are the General Partners and their children (and sometimes grandchildren) are the Limited Partners.
At inception, the General Partners (parents) own 100% of the FLP shares. However, over a period of time the parents make tax free gifts of Limited Partnership shares to the children. This is accomplished by using the annual gift exclusion of $14,000/person and the lifetime gift exclusion of $5,250,000. From the parents' standpoint, the "good news" is that they still maintain total control over the operation of the FLP as long as they remain the General Partners. Furthermore, an FLP is shielded from the claims of creditors of the Limited Partners.
If you are actively involved in the day to day operations of your business and anticipate having a taxable estate, you would be wise to consider the benefits of establishing an FLP. Whether you are a farmer in Palisade or Delta, a rancher in Montrose or Cortez or small business owner in Glenwood Springs or Grand Junction, an FLP could be the solution to protecting your most important asset from estate taxes.
The design and implementation of the FLP is complicated, and the services of an attorney familiar with drafting such agreements and the subsequent tax implications, is essential. In addition, the attorney should be experienced in working with real estate and business appraisers since their services are instrumental in insuring that the FLP meets the standards and requirements of the Internal Revenue Service.
Grand Junction Estate Planning Lawyer
Since 1993 the Law Offices of James A. Littlepage , a Grand Junction Estate Planning firm, has been helping families with large estates to minimize their federal estate tax liability utilizing a Family Limited Partnership. Mr. Littlepage has prepared over 2,000 estate plans and recently was recognized with a 2015 and 2016 Five Star Estate Planning Attorney℠ award. In 2014, 2013, 2012, 2011 and 2010 he received the Five Star Wealth Manager℠ award, as seen in 5280 and ColoradoBiz magazines. For assistance in protecting your estate from federal estate taxes, please contact our Grand Junction office for a complimentary 30 minute consultation for estate planning and probate.
Contact a estate planning attorney in Grand Junction at the firm to discuss how Family Limited Partnerships can help minimize your estate tax.