FAMILY LIMITED PARTNERSHIP – A VIABLE ALTERNATIVE TO A TRUST?

Traditionally,wealthy families in the UK have used trusts to pass assets down through the generations in a tax efficient
and controlled manner. However, since 2006, changes to the Inheritance Tax (IHT) legislation in the UK have penalised the
use of trusts for estate planning purposes. As a result, families have been looking for alternative structures that will
mitigate IHT when passing wealth through generations and this has led to the emergence of the Family Limited
Partnership (FLP) as a possible alternative to trusts for family succession purposes.
So far only a small number of FLPs have been established in the UK for wealth management and estate planning
purposes as clients and advisers continue to weigh up the pros and cons of using FLPs as compared with using trusts. The
key question is: Can FLPs replicate the benefits of trusts without the IHT disadvantages? The evidence so far suggests that
FLPs can in certain circumstances be a viable alternative to trusts particularly in enabling the first generation to pass
assets gradually to the second, however they are different in several....

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