What describes a Family Limited Partnership?

A Family Limited Partnership (FLP) is a type of business entity used primarily in estate planning contexts. Its structure allows parents (often as general partners) to maintain control over the business or assets while gifting interests (usually limited partner shares) to their children or other family members. This arrangement is beneficial for asset protection and can help minimize estate taxes, as the value of the gifts is often assessed at a discount due to the lack of control inherent in limited partnership interests.

In an FLP, the general partners manage the partnership and make decisions, while limited partners typically have no management authority and cannot dictate operational decisions. This dynamic is what enables parents to gift interests to their children while still having the ability to control the management of the partnership. The ability to retain general interests while gifting limited ones is a key feature that makes FLPs an attractive option for family estate planning, providing both control and wealth transfer strategies.

The other options do not accurately capture the essence of a Family Limited Partnership's primary purpose or structure. For instance, FLPs are specifically designed for family members, not unrelated parties, highlighting option one as inconsistent with the fundamental concept. Additionally, the notion that limited partners receive full control contradicts the very purpose of limited partnerships, which is to