Does a trust protect your finances or do you need to set up a family limited partnership for a family who has more than $1M?

Asked almost 2 years ago - Frisco, TX

Couple around 40 years old with two young children

Attorney answers (5)

  1. Mark Anthony Cohan

    Pro

    Contributor Level 15

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    Answered . This is an extraordinarily complicated question and I could go for pages upon pages about how this could possibly play out. Honestly, you need to sit down with an attorney or a CPA, tell them specifically what you want to accomplish and what you want to do.

    A couple with young children can have several options available to them to accomplish their goals but avoiding liability and tax implications are very important. It depends on the form of your assets and what you foresee happening, as well as any insurance policies you have in place.

  2. Steven J. Fromm

    Contributor Level 20

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    Answered . Mr Cohan offers sound advice. If you have this type of wealth then you owe it to your family to meet with an estate planning attorney to discuss these matters in more detail. You are talking about sophisticated and complex estate planning devices that should be applied only in certain situations. I have written two articles on Family Limited Partnerships at http://www.sjfpc.com/family_limited_partnership... and Family Limited Partnerships Failures and Mistakes at http://www.sjfpc.com/family_limited-partnership...

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  3. Douglass S Lodmell

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    Contributor Level 13

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    Answered . I am afraid I need to answer your question with two questions: What kind of trust do you refer to and from who or what do you seek to protection?

    1. If your main concern is tax and inheritance planning , you should seek advice with a local estate planning attorney.

    2. If additionnaly, you are concerned about liabilities and frivolous or bogus lawsuits, you should contact a specialized asset protection planning attorney. With the net worth you mention, my advice is to consider a sound asset protection plan that has an exit strategy that is tax neutral and does not compromise ownership nor control.

    Douglass Lodmell specializes in asset protection planning and is licensed to practice law in AZ and Fl. Answers... more
  4. David M. Pyke

    Contributor Level 15

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    Answered . I'm slow to answer this question, but I don't know what you mean by "protect." If protection is needed from creditors, neither a self-settled trust or a FLP are a total answer. If protection is from estate taxes, a will may be all that is needed (understanding that the law for 2013 is in limbo). Regardless, I agree with the comments that consultation with an estate planner is necessary. A good estate planner should be able to address both the tax and creditor-protection issues.

    There is no legal relationship created or implied by the exchange of message on this website. All statements are... more
  5. James P. Frederick

    Contributor Level 20

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    Answered . A Trust is a wonderful estate planning tool, and in my opinion, the best way to deal with planning issues surrounding minors. As far as your main question, however, there is no way to answer without knowing what you mean by "protect your finances." Protect them from what? Probate? A Trust does this, if properly funded. Taxes? A Trust can help in some respects, but taxes are going to need to be paid, in most cases. Trusts can be very helpful with minimizing estate taxes where those would otherwise apply. Creditor claims? A revocable trust does not offer any additional protection from creditors, in most cases. Divorce? Depends on the situation.

    As you see, more information is needed about your situation and your objectives. That is why consulting with an estate planning attorney is essential to properly developing and implementing your estate plan.

    Best wishes to you! You are very wise to be taking care of this, for the sake of your family!

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and... more

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