family limited partnerships

Family Limited Partnerships – A Commendable Alternative to Trusts

Family Limited Partnerships – A Commendable Alternative to Trusts

With the advent of the Finance Act 2006, lifetime trusts have been since 22 March 2006 subject to an immediate 20% inheritance tax entry charge on the initial capital above the threshold of £325,000, and an ongoing 10 year periodic inheritance tax charge and exit charge on capital distributions, capped at 6% of the value of the property in question. Family Limited Partnerships (FLP) have instead emerged as a conspicuous alternative to trusts for family succession purposes. Family Limited Partnerships refer to a limited partnership formed under the Limited Partnership Act 1907 to hold the family business or investments, with the notion that the parents will make gifts of their limited partnership interests to their children. Notably, the gift of the partnership interests to the other family... »