Family Limited Partnership Agreement Template

What Is the Family Limited Partnership Agreement?

A Family Limited Partnership (FLP) is an estate planning and asset protection vehicle where one or more General Partners control valuable assets while other family members hold Limited Partner interests with no management authority. General Partners make all business decisions regardless of their ownership percentage, while Limited Partners receive income distributions and capital appreciation without control or voting rights.

This structure creates substantial estate and gift tax savings through valuation discounts. Limited Partner interests are worth 30-45% less than their proportional share of underlying assets because they lack control and cannot easily be sold. When you gift discounted Limited Partner interests to children, you transfer more wealth using less of your lifetime gift tax exemption. The structure also provides creditor protection, as Limited Partners' creditors typically cannot reach Partnership assets or force distributions.

 

Is This Family Limited Partnership Agreement Right for You?

You need this agreement if you're:

• Looking to reduce estate taxes on multi-million-dollar estates
• Seeking asset protection for rental properties or investments
• Planning to transfer wealth while maintaining control
• Managing a family investment portfolio or real estate holdings
• Operating a family business you want to pass to heirs
• Concerned about protecting assets from creditors or lawsuits

You definitely need this agreement if:

• Your estate exceeds the federal estate tax exemption amount
• You own substantial real estate or business interests
• Your children aren't ready to manage inherited assets
• You want to take advantage of valuation discounts
• You're in a high-risk profession vulnerable to liability

 

 

Why Thousands Trust Legal GPS Templates

Save Money: Attorneys charge $5,000-$15,000 to draft family limited partnership agreements. This template costs $35.

Save Time: Download and customize your agreement in days instead of months spent in attorney meetings.

Look Professional: Court-tested structure with comprehensive articles covering all aspects of FLP formation and operation.

Keeps You Out of Court: The Fiduciary Duties and Conflicts of Interest article prevents self-dealing disputes, while the Transfer of Interests article creates the restrictions that support valuation discounts and satisfy IRS scrutiny of your estate planning strategy.

 

 

Get Protected in 3 Simple Steps

Step 1: Secure Checkout

Complete your purchase through our secure payment system. You'll receive immediate access to download your template.

Step 2: Instant Download

Download the family limited partnership agreement in Microsoft Word format. Open it in Word, Google Docs, or any compatible editor.

Step 3: Fill In the Highlighted Fields

Customize the agreement for your family's assets, structure, and objectives. Have all Partners sign, then file formation documents with your state and obtain necessary tax identification numbers.

 

Frequently Asked Questions

Can I use this template multiple times?

Yes. You can use this template to create multiple Family Limited Partnerships if your family situation requires separate partnerships for different asset classes or family branches.

Is this agreement legally binding?

Yes, when properly executed by all Partners and filed with the appropriate state authority. The Partnership becomes a legal entity with binding effect on all Partners and their successors.

What assets can I contribute to a Family Limited Partnership?

You can contribute rental properties, investment portfolios, business interests, publicly traded securities, closely held company stock, and other valuable assets. Avoid contributing your primary residence, retirement accounts, or S corporation stock which create tax complications.

How do valuation discounts work in Family Limited Partnerships?

Limited Partner interests trade at 30-45% discounts to underlying asset values because they lack control and cannot easily be sold. When you gift discounted interests to children, you transfer more wealth using less of your lifetime gift tax exemption, reducing estate taxes.

Do I need a lawyer to form a Family Limited Partnership?

While this template provides the legal structure, FLP formation involves complex tax and estate planning considerations. We recommend consulting a CPA specializing in partnerships for tax planning and annual compliance, and potentially an estate planning attorney for high-value estates.

What's the difference between a Family Limited Partnership and an LLC?

FLPs provide clearer control structures (General Partner has absolute authority), more established case law on valuation discounts, and charging order protection in most states. LLCs offer simpler taxation and formation but may provide less asset protection depending on your state's laws.