Written by Ryan Anderson, Sr. Partner and Private Wealth Advisor, and Mike Bleck, Partner and Sr. Estate Planning Advisor A Family Limited Partnership (FLP) is both a management structure and a tax strategy. It allows you to: Consolidate family business or investment holdings. Transfer limited partnership interests to family members at discounted values. Retain control while moving future appreciation out of your estate.
Written by Ryan Anderson, Sr. Partner and Private Wealth Advisor, and Mike Bleck, Partner and Sr. Estate Planning Advisor
A Family Limited Partnership (FLP) is both a management structure and a tax strategy. It allows you to:
- Consolidate family business or investment holdings.
- Transfer limited partnership interests to family members at discounted values.
- Retain control while moving future appreciation out of your estate.
Structure
- General Partners. Often you (and/or spouse) retain management control.
- Limited Partners. Children, trusts, or other family entities; no management authority.
Valuation Discounts
- Lack of Control. Limited partners can’t dictate operations.
- Lack of Marketability. Interests aren’t easily sold.
- Combined discounts often range from 20 to 35%.
Example
You transfer $20M in real estate into an FLP:
- Give 40% LP interest to an irrevocable trust for heirs.
- Appraiser applies 30% combined discount: $8M LP interest valued at $5.6M for gift tax purposes.
- Uses less exemption, moves more value out of the estate.
Non-Tax Benefits
- Centralized management of complex assets.
- Protection from creditors and divorce (to the extent allowed by state law).
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Gradual transition of family involvement.
Up Next: QPRTs—a targeted strategy for transferring personal residences at reduced tax cost.
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Ryan Anderson is a private wealth advisor and senior partner in Blue Trust’s Private Wealth division, serving clients in Houston and Dallas. Ryan works with individuals, families, foundations, and business owners on financial planning, charitable giving strategies, and long-term wealth stewardship, with particular experience advising physicians, entrepreneurs, and energy industry professionals.
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