Nevada Family Limited Partnership

 
NEVADA FAMILY LIMITED PARTNERSHIP
 
There is no instrument available today that has withstood attack by lawsuits, creditors, and former spouses better than the Family Limited Partnership (FLP).  The Family Limited Partnership consists of One or Two General Partners and a Limited Partner. 

GENERAL PARTNER

The General Partner of the FLP can be a parent, parents, a single person, or even a Nevada Corporation.  As the General Partner, you are assigned a small interest, usually 1%, which limits your liability in the event of litigation.  Although your interest may be small, as General Partner you maintain full control of the assets of the FLP. 
 
LIMITED PARTNER

The Limited Partner of your FLP can be your children, a charity, or even a Living Trust from any state.  The percentage interest not assigned to General Partners is assigned to Limited Partner(s).  The Limited Partners have no say in the operation or the assets of the FLP and cannot be attacked by your creditors. 
 
TAX REDUCTION

Your FLP can avoid gift and estate tax in a couple of ways.  If you assign income from your FLP to your Limited Partner(s) it will be taxed at a much lower rate, than if you had received it.  In addition, by giving the children or their trust a limited partner interest, you can reduce overall estate ownership and subsequent estate and gifting tax. 
 
FLEXIBLE ESTATE PLAN
    
In the long run, the FLP helps you to prolong or even avoid probate costs for your heirs.  At the demise of the General Partner(s) the Limited Partner/s automatically become: the new General Partner/s and can choose to dissolve the Partnership at this time, distribute the assets and pay the taxes or they can continue the existence of the FLP to it’s termination date.        
 
ASSET PROTECTION

Asset protection is probably the strongest motivation for establishing the Family Limited Partnership.  Its strength discourages attacks from lawsuits and creditors alike. 
 
AN ATTACK ON YOUR FAMILY LIMITED PARTNERSHIP
 
If you are attacked, your 1 or 2 % General Partner Interest in the FLP limits the amount a creditor can obtain from you.  In most cases, the cost of a lawsuit is more than a creditor will obtain. 

CHARGING ORDER

If a creditor obtains a charging order from a court, the court will likely give the creditor assignee status to your FLP.  This means that any distributions such as rental income, interest, dividends, etc. from your FLP must go to pay the creditor. This however, is where the partnership shows its strength.
 
BUILT-IN PENALTY

Federal Income tax on the amount of a charging order must be paid by the creditor prior to receiving any distributions from the Partnership.  Even after the creditor has paid the taxes on the unpaid judgment, the General Partner still has total control of how distributions are made.  For as long as the  General Partner decides that no distributions will be made, the creditor will  continue to receive nothing.
The partnership at this point can sell assets, retain or re-invest it’s proceeds.  The law expressively denies the creditor the right to take any interest / management or control of the partnership.  Nor can the creditor take any assets away from the partnership. 
The risk of paying taxes on money that may never be received becomes too great in most cases for a creditor (plaintiff) to pursue.  Never forget that there would also be legal fees that the Plaintiff would need to pay.        

Nevada has pro business and pro individual laws. 
In other states, it is not only more costly to form a Partnership, there are greater demands and  exposures.   
 
TO SET UP A NEVADA FAMILY LIMITED PARTNERSHIP, You are NOT required to: 
 
•  Reside in Nevada
•  Disclose percentages of distribution
•  Disclose names of Limited Partners
•  Disclose an Inventory of your Assets
   With these options you gain anonymity and choices unavailable anywhere else.    
 
WHAT IS INCLUDED IN THE FAMILY LIMITED PARTNERSHIP PACKAGE?  
  
•  Preliminary name check to confirm Partnership
   Availability.  
•  Preparation and Filing of Certificate of Limited  
   Partnership
•  Preparation and Filing of Initial List of General
   Partners
•  Obtain Tax ID Number (EIN Number) from IRS
   Preparation and submittal of Federal Tax ID    
   Application
•  Bank Account setup assistance with free initial
   checks
•  Resident Agent Services and address in 
   Nevada. 1st Class mail forwarding for first year.
•  Meeting Room accommodation at office in
   Nevada
•  Deluxe Partnership Agreement and Articles.
•  Partnership Administration:  Ensures that 
   General Partners List is filed correctly and on  
   time with the Secretary of State in Nevada.
•  Property transferal assistance.  Transferring 2
   properties into the Partnership if needed.
Nevada Corporations CSP
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