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Family Limited Partnership is an agreement meant to centralize the family business through the consolidation of business accounts and pooling of assets. This type of partnership protects assets and makes transitions in business partners easier because the wealth and ownership of the assets is already accounted for and clearly defined. This form of partnership gives the family members, who are owners, shares of the business.
There are two different types of partners in this agreement: general partner and limited partner. One person can be both types of partners, but are not required to be. The general partner has personal liability and has the role of managing the business. While, the limited partner is not personally liable for the whole business, just the amount she initially contributed to under the partnership agreement drawn up.
These shares are more easily transferred to future generations and provide estate tax incentives do to the gift tax exemption that these shares (assets) are considered thus untaxed. This benefits the trusts of the limited partners, by decreasing the taxation on them.

Limitations to FLPs:
The shares are only held by direct family members so they cannot be sold or traded outside the family or without the consent of the different partners.
The limited partner does not have a real say in the management of the company and may only have a right to vote on a few corporate matters and not on day to day happenings. This would be difficult for some partners do to the limited involvement and lack of control over the direction of the company.

Cleary, Jay, and Dave Hunter. "The Family Limited Partnership." Denver Business Journal. November 19, 1999.
Mintz, Robert. "The Family Limited Partnership." The Asset Protection Law Center. N.p., 2003. Web. 14 Nov 2010. <http://www.rjmintz.com/limited-partnerships.html>.
Rondo, David. "Protect Your Personal Assets." Investopedia. Investopedia ULC, 2010. Web. <http://www.investopedia.com/articles/pf/08/family-limited-partnership.asp?partner=answers>.