The New York Family Limited Partnership Agreement and Certificate is a legal document that establishes the formation and regulations of a family limited partnership (FLP) in the state of New York. An FLP is a type of business entity that allows families to pool their assets and manage them collectively while enjoying certain tax benefits and asset protection. The Family Limited Partnership Agreement and Certificate consists of two main components: the agreement and the certificate. The agreement outlines the terms, conditions, and rules governing the partnership's operations, while the certificate serves as official documentation of the partnership's existence and registration with the state. There are several types of New York Family Limited Partnership Agreements and Certificates, each designed to suit specific family circumstances and goals. Some notable types include: 1. General FLP Agreement: This type of agreement establishes a general family limited partnership where the general partner(s) possess full management control, decision-making authority, and unlimited liability, while the limited partner(s) contribute capital but have limited involvement and liability. 2. Limited FLP Agreement: Similar to the general FLP agreement, but with limited liability for the general partner(s) as well. This type provides greater protection for the general partner(s) from personal creditors and lawsuits. 3. Estate Planning FLP Agreement: Tailored for families seeking effective wealth transfer and estate planning strategies, this agreement often includes provisions such as gifting interests to the next generation, utilizing valuation discounts, and maintaining control over family assets. 4. Charitable FLP Agreement: For families inclined to incorporate philanthropy into their partnership structure, this agreement allows for the creation of a charitable entity within the partnership. It permits donations to charitable organizations and offers tax benefits associated with charitable giving. 5. Generation-Skipping Transfer Tax (GATT) FLP Agreement: Specifically designed to minimize or avoid the generation-skipping transfer tax, this agreement is commonly used to protect assets for future generations while avoiding excessive taxation. It is crucial for families considering the establishment of a Family Limited Partnership in New York to consult with legal and financial professionals to determine the most appropriate type of agreement and certificate based on their specific needs and objectives. Each agreement and certificate varies in terms of governance, control, taxation, asset protection, and long-term planning, so it's important to carefully assess the options before proceeding with the formation of a New York Family Limited Partnership.
New York Family Limited Partnership Agreement and Certificate
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Restriction on the types of assets transferred into the FLP. Because the FLP is a business, personal assets cannot be transferred into an FLP without potentially endangering your ability to use the annual gift tax exclusion to transfer limited partnership interests to your heirs.
LLCs protect every member from liability where FLPs only protect limited partners.
Corporations that form as Limited Partnerships (LPs) need a certificate. This certificate is filed with the New York State Department of State (NYSDOS). Businesses should consult an attorney to learn about legal structures. Applicants must file documents and pay a fee.
An LLC is controlled by a manager or managers, who may or may not be members. An FLP is controlled by its general partner(s). Managers and general partners do not have to be elected by a majority of members or limited partners; they can be named in the operating agreement or limited partnership agreement.
Some states only require that the certificate contains the name of the limited partnership, the name and address of the registered agent and registered office, and the names and addresses of all of the general partners.
A New York limited partnership is formed when (1) at least two persons have an agreement to form and operate a limited partnership with at least one being a general partner and at least one being a limited partner, and (2) the general partner executes a partnership agreement, and executes and files a certificate of ...
An LP allows certain investors (limited partners) to invest without having a management role or any personal liability, while the general partners carry all the liability. With an LLC, the owners can shield themselves from personal liability, but all generally have management roles.
The purpose of creating such an entity is generally to achieve creditor protection and reduce gift and estate taxes while maintaining control over the management and distribution of the partnership's assets.