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The benefit of this structure is this; if there are a slip and fall at your apartment house and you are sued, the creditors can\u2019t attack all of your assets. By putting the apartment house into the limited partnership, the judgment creditor cannot seize either the apartment house or the stock portfolio; instead, they must get a \u201ccharging
order<\/a>.\u201d<\/p>\n
This means the judgment creditor can only attack the asset involved in the litigation\u2026 in this case that would be the apartment house.<\/p>\n
So, a family limited partnership is a best used as a way of separating ownership from control. A family limited partnership has three parts:<\/p>\n
\n
1. The investment (the apartment house)<\/li>\n
2. The limited partner (who has no say in what is distributed or
done in regards to the investment)<\/li>\n
3. The general partner (who has complete say in what is done)<\/li>\n<\/ul>\n
Under this structure, the foreign APT is the 99% limited partner and the settlor is the 1% general partner. Under this structure, you will settle a foreign APT at the same time that you create the domestic FLP.<\/p>\n
As the illustration on the following page will show, you, the client, are initially the general and the limited partner. The 1% general partner has full control over the FLP and its assets.<\/p>\n
The 99% limited partner has no control over the FLP or its assets but has almost all of the ownership. Because a partnership requires at least two different partners under state law, another person or entity can attain a temporary interest until the foreign APT becomes a limited partner.<\/p>\n
Of course, the use of such a person or entity would not be necessary if your spouse were
involved as a second partner in the planning. Here\u2019s how it works. You give the limited partner 99% interest(ownership) and 0% control with no liability. You give the general partner 100% control and 1% interest (ownership).<\/p>\n
The limited partnership interest<\/b> is held by your asset protection trust. If a creditor tries to attach a judgment to the family limited partnership, you (the general partner with all the control) get to decide how much, if anything, to distribute.<\/p>\n
The process is outlined by the Uniform Limited Partnership Act, which says the judgment creditor only gets what the general partner (you) decides to distribute… which is often nothing. The folks who wrote the Uniform Limited Partnership Act inserted this charging order concept into the act to prevent the creditors of a partner from wreaking havoc on the partnership business.<\/p>\n
However, these same provisions can be utilized in the family limited partnership context to prevent the distribution of funds to the judgment creditor. This is because under the law the general partner, who is likely to be the establisher of the asset protection trust, can prevent distributions. An additional little bonus is that the Internal Revenue Service has also held in Revenue Ruling 77-137 that the creditor with a charging order<\/a> is treated as a substituted limited partner for tax purposes.<\/p>\n
As a result, the judgment creditor is burdened with the tax bill resulting from ownership without gaining the ability to force a breakup or a sale of the partnership or distributions from the partnership. In other words, he gets no money but acquires the tax responsibility.<\/p>\n
Structuring Your Family Limited Partnership For Utmost Protection<\/h3>\n
It is relatively uncomplicated to organize a family limited partnership. Here are the elements necessary for creating the articles of partnership:<\/p>\n
\n
Your name, address, purpose and length of the partnership.<\/li>\n
The capital contribution of each partner.<\/li>\n
The percentile distribution of profits and losses among partners.<\/li>\n
The respective duties and responsibilities of the general partner.<\/li>\n
The respective duties and responsibilities of the limited partner.<\/li>\n
General partner compensation. (Provisions for death, retirement, incapacity or bankruptcy of general and limited partners).<\/li>\n
Provisions for the termination and liquidation of the partnership.<\/li>\n<\/ol>\n
Your completed partnership articles must be filed in public records in accordance with your state law. As mentioned earlier, most states have adopted the Uniform Limited Partnership Act in its original or revised form, although several states have adopted their own limited partnership laws.<\/p>\n
In California and several other states with their own laws, a limited partnership is treated more like a corporation. They tend to grant the limited partners the many advantages of corporate stockholders, but without taxing the partnership as a corporation.<\/p>\n
How To Organize Your Family Limited Partnership in your asset protection plan<\/h3>\n
If you are married, you can serve as a general partner, and both you and your spouse may be limited partners. If you have children, consider giving them a gift interest. If you are unmarried, you may serve as general partner and your limited partners can be those relatives or friends who may be your intended beneficiaries.<\/p>\n
This is merely a suggested option and is not necessarily the way you have to set up beneficiaries.It is important to remember that it is not necessary for an actual person(s) to serve as either general or limited partners.<\/p>\n
A corporation, trust, or other general or limited partnership can be a general or limited partner.<\/p>\n
You have considerable flexibility to satisfy both your estate planning and asset protection objectives with a limited partnership.<\/p>\n
Clearly, you\u2019ll want to give the more at-risk partner the smallest partnership interest. If it is the husband, then he may own a 2%interest while the other family members divide the remaining 98%.<\/p>\n
Transferring Assets To Your Family Limited Partnership<\/h3>\n
You can basically transfer any personal asset; such as a home, cash, investment securities, or even a 100% stock interest in a closely held corporation, directly to your FLP. You will receive a limited partnership interest in the partnership based on the transfer of assets.<\/p>\n
Cash contributions can also be treated as loans, (but this offers you no protection since a creditor can then attach the loan proceeds that are owed to you).<\/p>\n
So for protection, you can utilize these other possibilities:<\/p>\n
Liquidate your operating corporation and donate its assets to the limited partnership. Begin by transferring all the corporation\u2019s assets to yourself, in exchange for re-transfer of the corporate shares back to the corporation.<\/p>\n
Then, donate these same assets to the limited partnership. This increases the basis of the general partners capital account in the partnership, and also remains a tax-free transaction, provided the corporation has a positive net worth. You may directly contribute your company shares to the limited partnership.<\/p>\n
This, too, presents no tax problems because the corporation will not dissolve while the limited partnership becomes its shareholder. Partners in a limited partnership can distribute their percentage ownership interests in any manner they desire. This is a very important feature in asset protection.<\/p>\n
You may, for instance, contribute most of the assets to the partnership and receive, in exchange, the smallest partnership share. Think about this in terms of protection from creditors.<\/p>\n
You might donate your home and other major personal assets to the partnership, and accept only a negligible 1% or 2% partnership interest in return.<\/p>\n
Your spouse, your children, or both and one or more of the various estate planning trusts can own the remaining partnership interest. Seek an advisor to help you to structure your partnership favorably.<\/p>\n
Again, I recommend contacting me and I will put you in touch with someone capable of doing all the work for you at a very reasonable fee.<\/p>\n
The bottom line asset protection principle here is that you own only a negligible partnership interest.<\/p>\n
Bottom Line: A creditor who is waiting for dividends to be paid can be in for a very long, VERY frustrating and ultimately profitless wait.<\/b><\/p>\n
Option (b), the seizure of the limited partner\u2019s interest, is a some what complicated process. The judgment creditor of a limited partner can obtain from the courts something called a charging order.<\/p>\n
A charging order \u201ccharges\u201d the limited partner\u2019s interest in the partnership with payment of the judgment.<\/b><\/p>\n
The charging order\u2019s primary function is to protect partners that are not involved in the debts of the debtor-partner. If the charging order does not result in payment, (which it typically won\u2019t) the court may appoint a receiver to collect profits or liquidation proceeds due to the debtor. Fortunately for the debtor, the involvement of a receiver doesn\u2019t really make any more difference in getting payment than what the creditor was able to do on his own.<\/p>\n
The Uniform Limited Partnership Act makes a stipulation for the charging order as the exclusive remedy of the creditor and can only be opposed by the debtor and no other partners. The court can order the interest of the limited partner sold at public auction to satisfy the claim, but this has practical limitations:<\/p>\n
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Any partner(s), using their own funds, can purchase the debtor partner\u2019s interest.<\/li>\n<\/ul>\n
\u2013Or-<\/p>\n
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The remaining partner(s), using partnership funds, can purchase the debtor-partner\u2019s interest on behalf of the partnership.<\/li>\n<\/ul>\n
The court can put a stop to the possibility of abuse by fixing the value of the limited partner\u2019s interest, to prevent it from being fraudulently acquired by the other partners, for an amount that is significantly less than its actual value.<\/p>\n
Nevertheless, this amount may also be a far smaller amount than the total of the creditor\u2019s judgment. A family limited partnership generally has little value, and it is remarkably easy for general partners to scatter any net worth the partnership does have.<\/p>\n
Besides, the debtor would only own a small interest in the partnership. The debtor-partner or his creditor wouldn\u2019t hold
anything of great value, even if the partnership had a significant net worth and high profitability.
There are other defensive strategies but from the debtor\u2019s position, the limited partnership secures the partnership interest from the majority of creditors. There are too many hoops to jump through before there is even a chance of some recovery.<\/p>\n
The truth of the matter\u2026 very few creditors are that determined. Most give up on their claim rather than spend all the time and effort on a state of affairs that produces so little in return.<\/p>\n
More On How An FLP Can Protect Your Assets<\/h3>\n
In taking into account the Family Limited Partnership (FLP), two fundamental questions are:<\/p>\n
(1) How does a FLP protect assets?<\/p>\n
(2) How much protection does a limited partnership provide?<\/p>\n
Let\u2019s again review the position of the partner in the family limited partnership, so you can completely understand the uselessness of a creditor who attempts to collect a claim through a limited partnership interest.<\/p>\n
The creditor of a limited partner has only these options:<\/p>\n
a) To seek to attach or assess the debtor\u2019s profits from the limited partnership;<\/p>\n
b) Attempt to seize all of the interest of the partnership;<\/p>\n
c) To try and reach the debtor\u2019s share of the partnership proceeds once the partnership is liquidated and the debtor\u2019s partner\u2019s interest in the partnership\u2019s remaining surplus, after payment of all partnership is distributed to the partner.<\/p>\n
Looking at each of these options, you\u2019ll notice that (a) is usually meaningless because profits can be deceptive, particularly when the limited partnership is a family affair and the interests of the participants associated, i.e., the general partners, can easily vote themselves a bonus, or pay themselves more salary, ensuring no surplus is available to pay profits.<\/p>\n
In this way, you can see that a limited partnership is quite like the family-owned corporation. Dividends are rarely paid and can be stopped at random. Excess funds that otherwise would be paid as dividends, can as easily be taken out of the corporation, (or partnership) as payroll, bonuses, loans, subcontractor work, or vendor payments.<\/p>\n
The limited partnership also differs from most other asset protection strategies in another important way. When property is put in trust or gifted to a third-party, the creditor may have an obstacle-free shot at the assets by claiming a fraudulent conveyance.<\/p>\n
This is an often-pursued strategy because the creditor wins 100% of the transferred asset, should he prevail in court.<\/p>\n
With a limited partnership, there is nothing worthwhile to attack. All the creditor has before him is a thicket of obstacles, because a debtor-limited partner owns a very small ownership interest when compared to his contribution to the partnership.<\/p>\n
The creditor, then, will have no chance of recovering the conveyed assets but must settle for the limited partnership interest and a meaningless victory.<\/p>\n
Option (c), waiting for the termination of the partnership is no brighter. Since payment of liquidation proceeds to the creditor requires dissolution of the partnership, it is again a situation entirely beyond the creditor\u2019s control, and one entirely within the control of the debtor and his family.<\/p>\n
Most partnerships have a permanent existence and are only terminated when the partners decide to terminate, thus they are not frequently dissolved.<\/p>\n
The partners may even keep the partnership intact until the creditor\u2019s judgment expires. Bear in mind that a creditor can do absolutely nothing to compel partners to either pay dividends or liquidate the partnership and pay net proceeds to the partner \u2013 or his creditor.<\/p>\n
There are plenty of savvy ways to make interest in a limited partnership even less enticing to creditors.<\/p>\n
Here are two:<\/p>\n
(1) Notify the creditor that the limited partnership will withhold all income distributions. The creditor will not receive any payment. Once satisfied this is true, the creditor will likely negotiate a favorable settlement. A creditor\u2019s attorney must oftentimes explain the hopelessness of the situation to the creditor, and a knowledgeable creditor\u2019s attorney will communicate that fact.<\/p>\n
(2) As assignee of the debtor\u2019s interest in the partnership, the creditor can be forced to pay the income taxes due to the seized partnership interest, even if the creditor received no payment. The creditor will then be forced to pay money out when his goal was to collect money.<\/p>\n
Any partnership agreement should contain a provision that at the election of the general partners, the limited partners will pay their fair share of tax on any profit-whether or not they actually received the profit. This will greatly discourage a creditor who now sees the partnership interest as a liability rather than an asset.<\/p>\n
Any partnership agreement should contain a provision that at the election of the general partners, the limited partners will pay their fair share of tax on any profit-whether or not they actually received the profit.<\/p>\n
This will greatly discourage a creditor who now sees the partnership interest as a liability rather than an asset.<\/p>\n
Video Transcript of Family Limited Partnership Agreement In-depth overview<\/h3>\n
$\"Family$ <\/p>\n
Today, I\u2019m going to talk about family limited partnerships<\/a>, some of the nuts and bolts about how to form one. What the documented FLP form looks like and where should you go to get one.<\/p>\n
Just a little bit on that, not too much on it. What does a typical family limited partnership agreement<\/b> look like? I\u2019m going to give you a 30,000-foot overview. We’re not going to get into the details of multiple partners, business purpose, the relatively new cases giving you some comfort that certain types of family-limited partnerships actually will survive the attack.<\/p>\n
We’re not going to go into the many cases that allow family-limited partnerships to be easily torn apart. I\u2019m not going to talk about that now. Just going to deal with what’s it looks like, how do you form it, what are the tricks.<\/p>\n
Let’s start with a typical LP-1 that we use to form the partnership. This is a form called an LP-1. It’s pretty much the same in all 50 States. Some are a little more complicated than others. This one happens to be from Delaware.<\/p>\n
Where should I setup a Family Limited Partnership? Delaware<\/h3>\nDelaware is by far my favorite jurisdiction by the way. It has super laws. The laws are really flexible. They allow remarkable flexibility and the ability to do things that you can’t get away with in other States as you can have by statute, zero ownership with the general partner and a 100% ownership with the limited partner of an asset protection trust<\/a>.<\/p>\n
That\u2019s just one of the hundreds of unique things in their laws. There’s no secret that all Fortune 500 companies try to go there if they can and I usually do because in most cases the simple act of holding a property for investment is not a trader business and in most States, you’re not required to qualify to do business.<\/p>\n
In places like California and New York and many of these other States try to impose huge fees on FLP’s, you know, close to $1,000 a year forcing you to take out-of-State companies and qualify them to do business. It normally isn’t necessary.<\/p>\n
Oftentimes, the rubber meets the road when you go in to open a bank account and the person that says Wells Fargo says well, if you want to open a bank account for a Delaware partnership in California, you’re going to have to qualify to do business and pay Uncle, not Uncle Sam, I guess it’s now Jerry Brown, close to $1,000 a year for the right to do business in California.<\/p>\n
I just tell my clients to get up and walk out of the bank. I walk to the next bank, the bank next door. It could even be another Wells Fargo. Eventually, they’ll take your money because unless you’re actually engaged in a trader business you normally don\u2019t need to qualify.<\/p>\n
That\u2019s something you should talk over with a lawyer because there are some repercussions if you don\u2019t, particularly if you get sued.<\/p>\n
Normally they’re not too relevant to my clients. Anyway, this is a sample family-limited partnership LP-1. I call the partnership Sample FLP.<\/p>\n
That\u2019s the name and all you need to do on most FLPs is give the name, the address of the agent for service or process. You can see that in paragraph 2 of this, the name of the general partner, other partnership and it usually needs to be signed by the general partner. That is all.<\/p>\n
That\u2019s filed and normally normal fees are between mid-fours to mid-fives depending upon how fancy of a kit you want to get. I usually use a company called Corporate Creations that are owned by one of my former law students.<\/p>\n
He\u2019s built it to the number three company formation company in the United States. They guarantee to beat anybody and everybody\u2019s prices. If you call and mention Rob Lambert<\/a> at Asset Protection Training, they will take good care of you. If they don\u2019t, I want to hear about it because they will hear from me. And they will beat everybody\u2019s price. I think I already said that.<\/p>\n
So, this is a typical thing that you file to form a partnership. Don\u2019t think it takes a lot of art to do it. You don\u2019t need to pay some lawyer $5,000 to do this type of thing.<\/p>\n
In fact, in most cases, most law firms will simply call a company like Corporate Creations and have them form the entity, put together a fancy set of often leather-bound books, send those out, the lawyer puts them together or has his or her, secretary or paralegal, you know, organize it.<\/p>\n
You give it to your client and you charge them $2,500 or $5,000 along with the standard form agreement. Kind of something you don\u2019t really need to give your lawyer a lot of money to do. However, if there are some very significant decisions that you will need to make along the process \u2013 and we’ll touch on some of them today.<\/p>\n
Anyway, this is a typical LP-1 and you’ll find that it’s downloadable like the agreement I\u2019m about to show you. It’s downloadable below.<\/p>\n
Now, I\u2019m going to take a look at a typically limited partnership agreement. We name this partnership Sample FLP. Stupid name but it made the form kind of easy. And let’s take a look at its table of contents. What it does is it just organizes your behavior.<\/p>\n
The operating agreement, the partnership agreement that you’re looking at is basically a list of rules that you agree to be bound by as the partner, general partner and limited partner and it’s \u2013 you\u2019ve got intense amounts of flexibility.<\/p>\n
All I care about when people do partnership agreements when they’re doing asset protection is that they understand the rules and that the partnership agreement is really solidly put together as all the business and tax provisions that might be necessary for the future and basically works.<\/p>\n
It needs to look and feel and act proper. The fundamentals, the formalities are not as intense as with a corporation but it’s still very important that you follow the rules and that\u2019s what a partnership agreement does.<\/p>\n
Let’s look at it. The first section is the organization. I\u2019m going to show you these little provisions but here we have the term.<\/p>\n
If you’re putting your partnership with an asset protection trust, they both should be roughly the same term. In fact, they both should be the same term. It has definitions you can see in Article 2. It has stuff about partnership capital.<\/p>\n
This actual agreement is written so that you can actually have multiple limited partners and it has something called 704(b)(2) provisions that are not that important to most asset protection folks but it means you can go into business with your \u2013 you can go into business, form a doughnut shop.<\/p>\n
You put up the money and your other partner does all the work. He might be the general partner, you might be limited and you can structure it so you get all the tax benefits and all of that say cashflow until you\u2019ve gotten your original investment back then you can split the cash flow and the tax benefits differently to allow the other partner to have a payback.<\/p>\n
That\u2019s called 704(b)(2) provisions, not critical but I almost always include them because they don\u2019t hurt anybody.<\/p>\n
Financial: This just talks about the \u2013 as you can see paragraph 4, the accounting methods, the fiscal year. It talks about management.<\/p>\n
Who manages the Family Limited Partnership (FLP)?<\/h3>\n
What you’ll see when I scroll through management, it’s basically 100% managed by the general partner. There are very few if anything that\u2019s important, nothing really with the operation. There are very few things that the limited partners have any voice on.<\/p>\n
That\u2019s why I love limited partnerships because by statute the limited partners don\u2019t have a lot of power and they don\u2019t have enough power to put themselves in a position where they’re vulnerable to easy reach by an aggrieved \u2013 somebody who thinks they\u2019ve been harmed by the partnership.<\/p>\n
Limited partners have such limited authority. It’s hard to maintain that they created, that they did a tort, that they\u2019ve violated a contract. That\u2019s always the general partner. That\u2019s always the managers. That is not the limited partners.<\/p>\n
And here in paragraph 6, limited partners, look, they have no management control. I\u2019m going to get to these in just a second.<\/p>\n
Books and records, very important, don\u2019t get sloppy. Never treat either your trust or your partnerships or any of your LLCs<\/a> as your alter ego. Remember, this is a separate brand new baby. This may be your first baby and you don\u2019t want to treat your baby as your pocketbook.<\/p>\n
This partnership and the related asset protection trust if you choose to do it, and this agreement is perfectly fine to do without an asset protection trust. You can have human beings or companies as partners. It just doesn\u2019t work very well from an asset protection point of view if you don\u2019t do that in my mind. But it works \u2013 it does work and it is designed that way.<\/p>\n
Let’s take a look at it. The first page, I\u2019m just going to read you the beginning so you can kind of see the stuff. This agreement of limited partnership is made and entered into as of date by the general partner and the limited partners. That\u2019s all you need to form it. That does it. Just to keep things clean so your records are sensible, it talks about having a business purpose. It talks about the name. It talks about the term which in this case 60 years. You can go much longer and there’s oftentimes no reason not to go much longer than 60 years.<\/p>\n
Sometimes, in fact, more and more of my clients are asking for trusts that go for a large amount of time. It can save a teeny bit of taxes but it mostly allows you to rule from the grave. I don\u2019t like people trying to do it because it’s very hard to give them any confidence that they can successfully do it but it’s becoming more and more popular as people are getting less and less comfortable that both their heirs and their entities are going to safe and sound.<\/p>\n
Faith in the government has rapidly fallen apart. Definitions: These aren’t really very important to you right now. You should read them but they’re all dealing with mostly tax consequences because of that thing I called 704(b)(2).<\/p>\n
That\u2019s not something I\u2019m going to talk about right now but it is something that you might want to do a little reading up on and certainly you can take this agreement and give it to your lawyer or whoever is helping you with your planning and this will save them an awful lot of work.<\/p>\n
This is a good starting place. This agreement has been reviewed by hundreds and hundreds of law firms and it’s just a simple straightforward document.<\/p>\n
It deals capital accounts and you actually need to maintain capital accounts, not something you actually do yourself but you need to maintain records so that your CPA can tell you what the magnitude of your capital account is when necessary to dissolve or make distributions from the partnership.<\/p>\n
All those distributions have to have what we call substantial economic effect, again, beyond the scope of this lesson but normally not an issue when you’re doing asset protection. I\u2019m just throwing things that you can talk with your advisor about.<\/p>\n
It’s quite important. The financial side is basically almost always a cash basis, calendar year taxpayer. There’s a lot of stuff about allocating that income and chargebacks.<\/p>\n
That is really irrelevant stuff to 99.9% of the people doing asset protection. But I tell you what by putting it in there, you sure make your agreement look and feel good and sometimes the appearances of reality are just as important as the reality.<\/p>\n
Paragraph 5 is important. This deals with management and basically read the first paragraph of 5.1. The operations and affairs of the partnership shall be administered by the general partner who shall have all authority, right, and powers conferred by law, etc.<\/p>\n
The real important thing is the limited partner has no authority. By the way, look at all, you know, here is an effort to identify some of the powers that the general partner has. It goes on and on.<\/p>\n
Responsibilities of the general partner, limitations of the general partner, basically he can’t steal and compensation, it says the general \u2013 5.4 \u2013 it says the general partner can get paid. This is all just standard stuff. You can do it almost any way you want. You have a huge amount of flexibility. Any good lawyer and indeed any good asset protection person will be able to give you your options and show you how you can do your options.<\/p>\n
Now here, 6.1, that\u2019s important. The limited partners shall not be bound by or be personally liable for the expenses, liabilities or obligations of the partnership.<\/p>\n
Now, I want to cram this into your head one more time. If you decide to combine a family-limited partnership with an asset protection trust, the asset protection trust should be the limited partner.<\/p>\n
Usually and often a 99% limited partner, sometimes 100%, sometimes 80%. There’s no hard and fast rule. But this limited partner trust where your savings are, where your money you’re going to rely upon if your whole world falls apart exists and resides, this limited partner trust shall not be bound by, this is 6.1, not be bound by or be personally liable for the expenses, liability or obligations of the partnership.<\/p>\n
Look at 6.2, limited partner shall take no part in or interfere in any manner with the control, conduct or operation of the partnership \u2013 period, bottom line and you can read 6.3, kind of not too important but the limited partners have the right to vote and have a voice on a few things like converting the limited partner into a general partner or alters the interest of the general partner or affects the status of the partnership as a partnership. That\u2019s (D).<\/p>\n
These are not relevant in most cases. It very seldom happens but it’s very important that you all realize that the limited partner really really is not likely to be successfully named and then held responsible for the actions of the partnership itself. The entity, the person that is responsible will almost always, really I can say always be the general partner.<\/p>\n
Seven has some transfer of interest restrictions. All of these are pretty standard. You’ll see them in all sorts of different types of agreements. It talks about records in 8.1. Inspection, reports \u2013 9 deals with dissolution. These are all standard.<\/p>\n
They don\u2019t really require a lot of explanation but your agreement should have all of this stuff in it, not because you think you’re even going to need it but it should have all the stuff in it so that if somebody decides they’re going to try to invalidate your partnership, you’re at least starting with a good agreement and you\u2019ve done proper, you\u2019ve done a proper bank account and you\u2019ve kept proper records and observed all the formalities required.<\/p>\n
That is a big deal. You don\u2019t live off the money and the partnership. It’s money that is for a business purpose. It’s part of your, also part of your savings that you’re holding for a rainy day. It’s not money you put in every week and take out every week. I\u2019m just going to keep flipping through.<\/p>\n
Twelve: Article 12 is just miscellaneous things. You can execute it in counterparts.<\/p>\n
It\u2019s binding on successors. Choice of law: Normally the choice of law will be the State in which you reside even though it’s a Delaware partnership. That\u2019s it. Look, this is 18 pages and only about three pages are really necessary.<\/p>\n
The rest of it is all there to make it feel good and look good. And, again, all you need is a general partner, signature right up here and a limited partner signature right here. And the general partner can be a human. It can be a company and the limited partner can be an offshore trustee. It can have a United States co-trustee.<\/p>\n
That would be if you have a kinetic trust where you are involved as co-trustee. That\u2019s probably unwise for most of you but there’s plenty of options and this is a darn good agreement to start with.<\/p>\n
I hope that this is helpful to you. Download it. Look it over and there will be a large number of additional videos dealing with the nuances but get the basic flavor of what an agreement looks like into your head. It\u2019ll help you with the vocabulary and it\u2019ll help you with your comfort.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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FLP Agreement Example; PDF table of contents<\/h3>
1. ORGANIZATION ……………………………………………………. 1
1.1 A DELAWARE LIMITED PARTNERSHIP. …………………………………………… 1
1.2 BUSINESS PURPOSE………………………………………………………………………. 1
1.3 NAME AND ADDRESS OF PARTNERSHIP……………………………………………. 1
1.4 TERM…………………………………………………………………………………………. 1
1.5 CERTIFICATE OF LIMITED PARTNERSHIP………………………………………… 1
1.6 PARTNERS…………………………………………………………………………………… 1
2. DEFINITIONS ……………………………………………………….. 2
2.1 Act …………………………………………………………………………………………….. 2
2.2 Agreement ………………………………………………………………………………….. 2
2.3 Capital Account…………………………………………………………………………… 2
2.4 Capital Contributions…………………………………………………………………… 2
2.5 Code ………………………………………………………………………………………….. 2
2.6 Distributable Cash……………………………………………………………………….. 2
2.7 Distributions……………………………………………………………………………….. 2
2.8 Economic Risk of Loss…………………………………………………………………. 2
2.9 General Partner ………………………………………………………………………….. 2
2.10 Interest ………………………………………………………………………………………. 2
2.11 Limited Partner(s) ……………………………………………………………………….. 3
2.12 Majority Vote ……………………………………………………………………………… 3
2.13 Net Income and Net Losses …………………………………………………………… 3
2.14 Nonrecourse Deductions………………………………………………………………. 3
2.15 Nonrecourse Liabilities ………………………………………………………………… 3
2.16 Partner Nonrecourse Debt ……………………………………………………………. 3
2.17 Partner Nonrecourse Deductions…………………………………………………… 3
2.18 Partners……………………………………………………………………………………… 3
2.19 Partnership…………………………………………………………………………………. 3
2.20 Partnership Minimum Gain………………………………………………………….. 3
2.21 Percentage Interests …………………………………………………………………….. 3
2.22 Treasury Regulations …………………………………………………………………… 4
3. PARTNERSHIP CAPITAL ………………………………………….. 4
3.1 CAPITAL CONTRIBUTIONS…………………………………………………………….. 4
3.2 INTEREST……………………………………………………………………………………. 4
3.3 WITHDRAWAL AND RETURN OF CAPITAL………………………………………… 4
3.4 CAPITAL ACCOUNTS…………………………………………………………………….. 4
4. FINANCIAL ………………………………………………………….. 4
4.1 ACCOUNTING METHOD. ……………………………………………………………….. 4
4.2 FISCAL YEAR………………………………………………………………………………. 4<\/p>
ii
4.3 EXPENSES OF THE PARTNERSHIP……………………………………………………. 4
4.4 INCOME LOSSES AND DISTRIBUTIONS……………………………………………… 4
5. MANAGEMENT ……………………………………………………… 7
5.1 MANAGEMENT OF THE PARTNERSHIP. ……………………………………………. 7
5.2 RESPONSIBILITIES OF THE GENERAL PARTNER………………………………… 9
5.3 LIMITATIONS ON GENERAL PARTNER\u2019S AUTHORITY. ……………………….. 9
5.4 COMPENSATION OF GENERAL PARTNER. ………………………………………… 9
5.5 WITHDRAWAL, BANKRUPTCY, DISSOLUTION OR CHANGE IN CONTROL
OF THE GENERAL PARTNER. ………………………………………………………………….. 10
5.6 REMOVAL OF GENERAL PARTNER………………………………………………… 11
5.7 TAX MATTERS PARTNER…………………………………………………………….. 11
5.8 LIABILITY OF GENERAL PARTNER. ………………………………………………. 11
6. LIMITED PARTNERS …………………………………………….. 11
6.1 LIMITED LIABILITY. …………………………………………………………………… 11
6.2 NO MANAGEMENT AND CONTROL………………………………………………… 11
6.3 VOTING RIGHTS AND POWERS……………………………………………………… 11
6.4 LIMITATIONS…………………………………………………………………………….. 12
7. TRANSFERS OF INTERESTS AND WITHDRAWALS …………… 12
7.1 TRANSFERS AND WITHDRAWALS RESTRICTED……………………………….. 12
7.2 CONDITIONS TO CONSENT. ………………………………………………………….. 12
7.3 TRANSFERS IN VIOLATION OF AGREEMENT. ………………………………….. 13
7.4 EFFECT OF INVOLUNTARY TRANSFER. ………………………………………….. 13
8. BOOKS AND RECORDS…………………………………………… 13
8.1 RECORDS. …………………………………………………………………………………. 14
8.2 INSPECTION. ……………………………………………………………………………… 14
8.3 REPORTS. …………………………………………………………………………………. 14
9. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP… 15
9.1 EVENTS CAUSING DISSOLUTION…………………………………………………… 15
9.2 DISTRIBUTION ON DISSOLUTION…………………………………………………… 15
10. INDEMNIFICATION ………………………………………………. 16
10.1 GENERAL PARTNER………………………………………………………………… 16
10.2 SECURITIES LAWS. …………………………………………………………………….. 16
11. POWER OF ATTORNEY ………………………………………….. 16
11.1 ATTORNEY-IN-FACT…………………………………………………………………… 16
11.2 SPECIAL PROVISIONS………………………………………………………………….. 17
12. MISCELLANEOUS ………………………………………………… 17
12.1 COUNTERPARTS…………………………………………………………………………. 17
12.2 BINDING ON SUCCESSORS. …………………………………………………………… 18
12.3 SEVERABILITY. ………………………………………………………………………….. 18
12.4 NOTICES. ………………………………………………………………………………….. 18
12.5 CAPTIONS. ………………………………………………………………………………… 18
12.6 GENDER……………………………………………………………………………………. 18
12.7 CHOICE OF LAW. ……………………………………………………………………….. 18
12.8 ENTIRE AGREEMENT………………………………………………………………….. 18<\/p>
\u00a0<\/h2>
$\"asset$ Download LP-1 Certificate of Limited Partnership form<\/a><\/h2>
$\"asset$ Download Example Family Limited Partnership Agreement<\/a><\/h2>
$\"asset$ Download Family Limited Partnership Agreement, LP-1 form <\/a><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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Asset Protection Planning<\/h4>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Setup a Trust or LLC<\/a><\/li>
Belize LLC\u2019s<\/a><\/li>
Offshore Banking Overview<\/a><\/li>
5 Key to Successful Asset Protection<\/a><\/li>
Offshore Trust Asset Protection and Tax Planning<\/a><\/li>
Bankruptcy & Asset Protection<\/a><\/li>
Being Pro-Active is Smart<\/a><\/li>
Offshore Bank Account<\/a><\/li>
Expatriation Tax<\/a><\/li>
Offshore trust domestic for tax purposes<\/a><\/li>
Asset Protection Cost<\/a><\/li>
Asset Protection Professionals<\/span><\/span><\/span><\/a><\/li><\/ul>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\n\t\t\t \n\t\t\t\t\t\t\n\t\t\t\t\t\tPlease Take A Moment To Complete Our Survey <\/span>\n\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"
Family Limited Partnership (FLP) An Family Limited Partnership FLP is often incorrectly touted as a reliable tool for protecting assets. It is best used ONLY as a way to separate ownership from control and can be a powerful add-on to your asset protection trust. Asset protection protects your valuable assets (business, savings, house, cars, stock […]<\/p>\n","protected":false},"author":49,"featured_media":12343,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,12],"tags":[313,90,103,314],"_links":{"self":[{"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/posts\/284"}],"collection":[{"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/comments?post=284"}],"version-history":[{"count":0,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/posts\/284\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/media\/12343"}],"wp:attachment":[{"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/media?parent=284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/categories?post=284"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetprotectiontraining.com\/wp-json\/wp\/v2\/tags?post=284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}