Denver Family Limited Partnership Attorneys

Family Limited Partnerships (FLPs) are a powerful tool in estate planning and asset management, offering families a structured way to protect their wealth and pass it on to future generations. By establishing an FLP, families can manage their assets more efficiently, reduce potential estate taxes, and safeguard their financial legacy. At Evans Case, we recognize the importance of preserving your family’s wealth, and we are committed to providing tailored legal solutions to help you achieve your goals.

Our experienced Trust Attorneys in Denver specialize in structuring Family Limited Partnerships that are designed to meet the unique needs of each client. Whether you’re looking to protect a family business, simplify the transfer of assets to heirs, or reduce liability exposure, our attorneys will work closely with you to create an FLP that aligns with your financial objectives. Incorporating tools like a Revocable Living Trust alongside your FLP can provide additional flexibility and security in managing your estate.

In addition to FLPs, we offer a comprehensive range of estate planning services, including Powers of Attorney and wills. These essential documents ensure that your financial and healthcare decisions are handled according to your wishes and that your assets are distributed smoothly after your passing. Our Will Attorneys can help integrate these elements into your estate plan to ensure it works seamlessly with your FLP, providing a cohesive strategy to protect and preserve your legacy.

At Evans Case, we are devoted to helping families build strong, sustainable estate plans that stand the test of time. Whether you are securing a family business, protecting assets from potential creditors, or preparing for the efficient transfer of wealth, our Denver attorneys are here to help. Contact us today to learn more about how our personalized legal services can set you and your family up for long-term success.

What Is a Family Limited Partnership?

A Family Limited Partnership, or FLP, is a type of business entity that offers families the ability to manage and protect their assets while allowing for strategic wealth transfer planning. An FLP is an especially popular option for families with high-value assets like real estate, investments, or family-owned businesses. With an FLP, there are typically two different types of partners: general partners and limited partners.

General Partners: The general partners in an FLP will have full control over the management and operations of the partnership. They make decisions regarding asset management, investment strategies, and any other activities related to the business. However, general partners also bear unlimited liability for all of the partnership’s debts and obligations.
Limited Partners: On the other hand, limited partners contribute capital and have ownership in the FLP, but they do not have direct control over the management of the partnership. The liability of a limited partner is determined by the amount that they have invested in the business. This is usually a common option for family members who wish to support and benefit from the partnership but do not necessarily want to be actively involved.

Having clearly defined roles within an FLP allows senior family members to maintain control over the assets while transferring ownership to younger generations. If you and your family are interested in establishing an FLP, the estate planning and business formation attorneys at Evans Case are here to offer our legal expertise every step of the way.

Benefits of Using an FLP

There are a number of different benefits that a Family Limited Partnership has to offer, making them an appealing option for families interested in preserving and growing their wealth. Some of the key advantages of an FLP include:

Tax Benefits: Perhaps one of the greatest benefits of an FLP is its potential to reduce estate and gift taxes. Because the assets are controlled by general partners, the ownership shares can often be transferred at a discounted rate, which helps to reduce the overall taxable value of the estate. This is particularly helpful when it comes to dealing with larger estates, as it gives families the opportunity to pass on their wealth to future generations without incurring unnecessary tax liabilities.
Asset Protection: Another primary benefit of an FLP is that it provides useful asset protection benefits. Holding assets within an FLP allows families to create a legal barrier between their personal assets and the partnership. This often makes it more difficult for potential creditors to access those assets in case of a legal claim.
Control Over Assets: General partners retain centralized control over all assets within the partnership. This structure often helps families keep a unified investment strategy and prevents disputes among family members and heirs. It also ensures that all major decisions align with the family’s long-term goals. An FLP allows senior family members to have greater control over investment and management decisions.
Wealth Transferring: FLPs are an effective and strategic way to ensure that wealth is transferred to future generations. They offer families the opportunity to reduce the estate’s taxable value and retain control over their assets. This is particularly beneficial for business owners and families with large investment portfolios.

There are a great number of advantages that a Family Limited Partnership can offer. Deciding whether or not an FLP is right for you and your family is ultimately your decision. However, speaking with a qualified Denver attorney can help shine a light on all of your options and help you explore all potential avenues. We understand the importance of preserving your wealth for future generations and are dedicated to helping you and your family plan for the future. To speak with one of our trusted attorneys, call Evans Case today and schedule a consultation.

What Kind of Formation Is Right for Your Business?

Choosing the right legal entity for your family’s assets or business is a highly important decision that can have long-lasting effects. In Denver, there are several different business formation options that each offer their own unique set of pros and cons. Speaking with an attorney about your business formation can help you explore all of your possible options and decide on the setup that is right for you and your family. Here are some of the most commonly seen formations in Denver businesses:

Sole Proprietorship: A sole proprietorship is one of the simplest and most affordable types of business entities that business owners are able to establish in Colorado. With this setup, the business is owned and operated by just a single person, with no distinction between the owner and the business. This type of business entity gives the owner full control, but offers no liability protection, meaning that the owner will be fully responsible for all debts and obligations. With a sole proprietorship, your personal assets may be at risk if the business incurs liabilities. This structure is not recommended for families looking to protect their personal assets or pass on wealth to future generations.
General Partnership: A general partnership is a business entity that involves two or more owners who share management and operation responsibilities, and also share all liability for the business’s obligations. Similarly to a sole proprietorship, each partner is personally liable for all debts and actions of the other partners. A general partnership is typically best suited for small business ventures with co-owners who are actively involved in the business. This type of partnership is also not recommended for families focused on preserving their wealth.
Limited Liability Company: A limited liability company (LLC) is one of the most popular and common business formations in Denver due to the flexibility and liability protection that it offers. An LLC protects its members from business liabilities, and is often managed by members or designated managers. One of the biggest advantages of an LLC is its ability to choose its tax classification depending on what works best for the business.
Limited Partnership: A limited partnership (LP) consists of at least one general partner and one limited partner. The general partners will have full liability for the partnership’s obligations and will manage the business. Limited partners invest in the business, but do not participate in the management or operations of the business. They are only liable for the amount that they invested in the partnership. LPs are popular choices for families whose senior members act as general partners and have younger generations acting as limited partners to gradually transfer ownership. This business structure does not tend to offer complete asset protection without the help of additional estate planning strategies.
Family Limited Partnership: An FLP is a specialized version of a Limited Partnership. As we have discussed, an FLP aims to serve the specific financial needs of a family by allowing families to transfer wealth while reducing the taxable value of the estate. For families in need of managing real estate, family businesses, or other significant investments, an FLP is an excellent, long-term estate planning strategy.
Family Limited Liability Company: A Family Limited Liability Company is also a variation of a standard LLC that is designed specifically for family-owned businesses. An FLLC provides liability protection for all members and offers more flexibility than an FLP when it comes to the management of the business. This is typically a popular option for families who want to share the management responsibilities or have diverse business interests.

There are a number of different options when it comes to setting up your Denver business. For families who are interested in preserving their wealth and maintaining control over their assets, an FLP or FLLC are popular choices. We suggest consulting with an experienced attorney before making any major decisions about your business. The team of attorneys at Evans Case is prepared to walk you through all of your options and help you decide which formation is best for you. For more information about how our Denver attorneys can properly help you plan for your future, schedule a consultation today.

How to Create a Family Limited Partnership

To create a Family Limited Partnership in Denver, there are some key steps that business owners must take to ensure that their partnership is protected and compliant with state laws. Working with an experienced attorney will help ensure that your FLP is set up accurately and helps you achieve your long-term financial goals. Here is a detailed process for creating an FLP in Denver:

Drafting the FLP Agreement: The process of establishing an FLP begins with the partnership agreement, which aims to clearly define the roles, rights, and responsibilities of all partners involved in the partnership. It outlines important information like how the profits will be divided, how decisions are made between partners, and what happens in the event that a partner leaves the partnership or passes away unexpectedly. Drafting a clear and thorough agreement is an important step that helps prevent future disputes and keeps the business running smoothly.
Filing a Certificate of Limited Partnership: The next step in the process is to file the Certificate of Limited Partnership with the Colorado Secretary of State. This document will officially register the FLP as a legal entity in Colorado and provide basic information about the partnership, such as the name, address, and names of the partners involved. The filing process also involves a registration fee.
Obtaining an EIN: The FLP must obtain an Employer Identification Number (EIN) from the IRS. This number serves the partnership’s federal tax identification number and is required in order to open bank accounts, file a tax return, or conduct other financial transactions on behalf of the business.
Transferring Assets into the FLP: Once the FLP is registered and formed, the next step is to formally transfer all assets into the partnership. These assets typically include real estate, stocks, bonds, and other investments. Each transfer of assets should be recorded, and the value should be appraised to keep an accurate report of all assets.
Appointing a General Partner: Choosing a dependable general partner for your business is an important decision. The general partner will be responsible for managing the FLP and making key decisions about managing the assets. The general partner will have control over the operations and be liable for all debts and obligations, so it is highly recommended that you choose a reliable and trustworthy partner.
Regular Documentation: It is important to maintain accurate and detailed records and file any necessary reports with the state on time. Failure to do so can result in the loss of some of the protections that an FLP offers.

Creating an FLP involves more than just drafting a simple document. There are a series of steps that every business owner and partner should follow in order to comply with state laws and keep their business running smoothly. For assistance creating your FLP, we strongly recommend consulting with one of the estate planning professionals at Evans Case. Our Denver attorneys are well prepared to guide you through the process of establishing an FLP and setting you and your family up for continued success. We understand the importance of preserving your assets and your wealth, and that is why Evans Case has been trusted by Denver families for years to help you protect your legacy. Call today to schedule a consultation and see how we can make a difference.

Call Evans Case Today for Help Setting Up Your Family Limited Partnership

Setting up a Family Limited Partnership in Denver requires strategic planning and attention to detail. The process begins with ensuring that you are choosing the right entity for your business, drafting a strong partnership agreement, and remaining in compliance with legal requirements in order to maximize your benefits. Evans Case understands that no two families are the same. Our approach with each FLP involves a personalized strategy that is tailored to your family’s long-term goals. Our Denver firm is committed to helping families protect their assets and ensure a smooth transfer of wealth from one generation to the next. For more information about how Evans Case can serve you and your family, call us today.

Frequently Asked Questions

How does an FLP provide asset protection for families in Colorado?

A Family Limited Partnership (FLP) in Colorado offers asset protection by creating a legal barrier between personal assets and partnership assets. When assets are held within an FLP, they are generally shielded from creditors' claims against individual family members, making it more challenging for creditors to access these assets in the event of legal actions. This structure helps safeguard family wealth from potential lawsuits or financial liabilities incurred by individual partners. Additionally, the centralized control within the FLP allows for consistent management and protection of family assets.

What are the tax implications of forming an FLP in Denver?

Forming an FLP in Denver can have several tax implications. Transferring assets into the partnership may qualify for valuation discounts, potentially reducing estate and gift taxes. However, the partnership's income is typically passed through to the partners, who report it on their individual tax returns, which may affect personal income tax liabilities. It's essential to consult with a tax professional to understand the specific tax consequences and benefits of establishing an FLP in your situation.

Who manages the assets within an FLP, and can I retain control after forming one?

In an FLP, the general partners manage the assets and make decisions regarding the partnership's operations. As the person forming the FLP, you can retain control by serving as a general partner, allowing you to oversee asset management and decision-making processes. Limited partners, often other family members, have ownership interests but typically do not participate in day-to-day management, preserving centralized control. This structure enables you to maintain authority over the assets while facilitating the transfer of ownership interests to family members.

How can I determine if a Family Limited Partnership is the right estate planning tool for my family in Denver?

Determining if an FLP is the right estate planning tool for your family in Denver involves evaluating your specific financial goals, asset types, and family dynamics. Consider factors such as the desire for asset protection, tax planning opportunities, and the need for centralized management of family assets. Consulting with an experienced estate planning attorney can provide personalized guidance, helping you assess the suitability of an FLP in achieving your objectives and ensuring compliance with Colorado laws. This professional advice is crucial to tailor an estate plan that aligns with your family's unique needs. Reach out to us for more information about your case.

Additional Information in Denver, Colorado

RSM U.S - Estate Planning Q&A: Family limited partnerships explained: Overview of Family Limited Partnerships (FLPs) and their role in estate planning. It explains that an FLP consists of general partners, who manage the business and are liable for its debts, and limited partners, who are passive investors without liability for partnership debts. FLPs are commonly used to pool family resources, operate as investment entities, or provide centralized management for multiple family businesses. The article highlights benefits such as centralized asset management, protection from financial risks, and the ability to gift ownership interests, which can be advantageous for estate planning. This resource is valuable for individuals considering an FLP, offering insights into its structure, benefits, and potential applications in managing and transferring family wealth.

Investopedia - Family Limited Partnership (FLP): Definition, Pros & Cons: Comprehensive overview of FLPs, explaining that they are business or holding companies owned by two or more family members. In an FLP, family members can purchase shares, with profits distributed according to the partnership agreement. The article outlines the roles within an FLP, distinguishing between general partners, who manage operations and bear unlimited liability, and limited partners, who have no management responsibilities and limited liability. It also discusses the advantages of FLPs, such as centralized asset management and potential tax benefits, as well as disadvantages, including the complexity of setup and potential family conflicts. This resource is valuable for individuals considering an FLP, offering insights into its structure, benefits, and potential drawbacks.

Wolters Kluwer - Family limited partnerships 101: Detailed overview of Family Limited Partnerships (FLPs) and their role in estate planning. It explains that FLPs are legal entities allowing family members to pool assets, facilitating the transfer of wealth to younger generations while potentially reducing gift and estate taxes. The article outlines the structure of FLPs, distinguishing between general partners, who manage the partnership and bear unlimited liability, and limited partners, who have ownership interests without management responsibilities and limited liability. Additionally, it discusses the benefits of FLPs, such as centralized asset management, asset protection, and valuation discounts for tax purposes. This resource is valuable for individuals considering an FLP, offering insights into its structure, benefits, and potential applications in managing and transferring family wealth.