Florida's new limited partnership act: provisions of interest for estate planning and asset preservation purposes.

• Author: Sparks, Brian C.

Despite continuing attacks by the Internal Revenue Service, family limited partnerships ("FLPs"), and their sister entities, family limited liability companies electing to be taxed as partnerships, continue to be popular estate planning tools for a host of tax and nontax estate planning purposes. Forming such partnerships in Florida has been desirable for estate planning and asset preservation purposes, in part, due to favorable features particular to Florida law. Florida's 2005 adoption of a completely new limited partnership act (1) will enhance the estate planning and asset preservation features of Florida FLPs.

In 2002, members of the Tax Law, Business Law, and Real Property, Probate and Trust Law sections of The Florida Bar created a special committee to study the existing Florida limited partnership statutes and the Uniform Limited Partnership Act promulgated by the National Conference of Commissioners on Uniform State Laws ("NCCUSL"). The committee worked for three years to develop hybrid legislation that was enacted by the Florida Legislature, with a few amendments, during the 2005 legislative session, and then signed into law by Gov. Bush as the Florida Revised Uniform Limited Partnership Act of 2005. (2)

From both estate planning and asset preservation perspectives, the act retains all of the old desirable features and adds several new ones, which should make Florida an even more popular situs for FLPs. This article will summarize selected provisions of interest for estate planning and asset preservation purposes.

Effective Date Provisions

Section 27 of the act provides that, except as otherwise provided, the act takes effect on January 1, 2006. Section 620.2204 contains special effective date provisions for existing relationships and [section] 620.2205 provides that the act does not affect actions commenced, proceedings brought, or rights accrued before it takes effect.

Revise References to the Act in FLP Agreements

Section 620.1102(1) defines "act" as the Florida Revised Uniform Limited Partnership Act of 2005, as amended. Accordingly, references to the Florida limited partnership act in FLP agreements need to be updated.

* "Transferee" and "Transferable Interest." Sections 620.1102(26) and 620.1102(25), respectively, adopt the NCCUSL terminology of (a) "transferee," to mean a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a partner, and (b) "transferable interest," to mean a partner's right to receive distributions. Thus, the former term "assignee" is gone. See, e.g., former [subsection] 620.152...