Limited partnership structures have become an increasingly common form of property investment vehicle over recent years and it is easy to forget that (unlike limited companies or limited liability partnerships) they are not legal personalities.

Can you sue a limited partner?

Limited partners cannot incur obligations on behalf of the partnership, participate in daily operations, or manage the operation. A creditor may sue for repayment of the partnership’s debt from the general partner’s personal assets.

What is the purpose of a family limited partnership?

A family limited partnership (FLP) is a holding company owned by two or more family members, created to retain a family’s business interests, real estate, publicly traded and privately held securities, or other assets contributed by its members.

Who are the partners in a family limited partnership?

The Family limited partnership is nothing more than the traditional partnership for which “only family members” can be partners as either general partners or limited partners.

How does a limited partnership work in real estate?

It is not uncommon for a business owner to maintain control of the family business or real estate portfolio within a family limited partnership by retaining the general partnership interests. This enables the children to own an economic interest in the business while the parents retain full control over its operations and sale.

Is the income from a jointly owned property a partnership?

income derived from property which is jointly owned in circumstances which do not amount to partnership. In this case the individual joint owner does receive his share of the income in his personal capacity, and it does form part of his own rental business. Merely holding property jointly does not constitute a partnership.

What are the disadvantages of a limited partnership?

Limited minority interest discounting which is typically an additional 15% to 35% reduced estate tax valuation to the minority position (lack of control) in the business or underlying assets. Combined, these two discounts can amount up to 70% or more.