Asset protection caveats when using family limited partnerships as an estate planning vehicle.
The Tax Adviser › Vol. 25 Nbr. 10, October 1994
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Summary
The family limited partnership has been touted as the ideal estate planning vehicle because of the ability to protect assets from creditors, but the protections are not unlimited. A creditor of a partner can reach the beneficial interest of a partner by obtaining a charging order, but a beneficial interest alone only allows for distribution participation. Other threats to the assets include increased creditor protection by the courts, fraudulent transfer laws, liability resulting from an asset, bankruptcy of a partner, perfected security interests in a partner's share and personal liability of the general partner.
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Asset protection caveats when using family limited partnerships as an estate planning vehicle.
Recently, the estate planning community has been deluged by articles, seminars and other forms of presentations professing the benefits of family limited partnerships as the estate planning tool of the 1990s. In making this statement, practitioners are comparing them to what was considered to be the estate planning recommendation of the 1980s--the use of a living trust. Some commentators have indicated that the family limited partnership is a vehicle that should generally b...
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