Family Limited Partnerships in Oregon

Serving Eugene, Salem, and Roseburg – Creating Wealth Strategies

A Family Limited Partnership (FLP) is a legal entity that allows family members to pool their assets while maintaining control over how those assets are managed and distributed. In Oregon, FLPs are commonly used for estate planning, asset protection, and tax benefits. This type of partnership typically consists of general partners, who control decision-making and management, and limited partners, who have ownership interests but little to no direct management authority. By structuring family wealth within an FLP, individuals can efficiently transfer assets to future generations while minimizing tax burdens and maintaining control over family investments.

One of the primary benefits of an FLP in Oregon is its ability to reduce estate and gift taxes. When assets are transferred into an FLP, they can be subject to valuation discounts due to their limited marketability and control restrictions. As a result, the taxable value of transferred interests can be lower than the actual market value of the underlying assets. This strategy allows families to pass down wealth while reducing their overall estate tax liability. Additionally, FLPs provide an efficient way to gift limited partnership interests to heirs over time, taking advantage of the annual federal gift tax exclusion.

Asset protection is another significant advantage of using an FLP. Because limited partners do not have control over partnership assets, their interests are generally protected from creditors. In Oregon, FLPs can serve as a shield against lawsuits, divorce settlements, and other financial risks by restricting the ability of outside parties to access or seize partnership assets. General partners maintain control over business operations and investments, ensuring that family wealth remains intact and protected from external threats.

However, setting up and managing an FLP in Oregon requires careful planning and compliance with state and federal laws. Families should work with experienced legal and financial professionals to draft a comprehensive partnership agreement that clearly outlines management roles, distribution policies, and succession planning. While FLPs offer significant benefits, they must be structured correctly to avoid IRS scrutiny and potential legal challenges. With proper planning, a Family Limited Partnership can be a powerful tool for preserving family wealth and ensuring a smooth transition of assets to future generations.