Question 1

How is a Florida limited partnership formed?

Accepted Answer

Formation: (1) File a Certificate of Limited Partnership with the Florida Division of Corporations (required information: LP name, registered agent, general partner names and addresses, and effective date; filing fee: $925). (2) Draft a partnership agreement (the governing document specifying: capital contributions, profit/loss allocation, management authority, distribution policy, admission/withdrawal of partners, and dissolution procedures). (3) Designate a registered agent in Florida. (4) Obtain an EIN from the IRS. (5) Open a partnership bank account. The partnership agreement does not need to be filed with the state; it is a private document between the partners.

Question 2

What are the advantages and disadvantages of a Florida LP vs. an LLC?

Accepted Answer

LP advantages: familiar structure for investors (limited partners are passive investors, similar to shareholders), established case law (LPs have been used for decades; the legal framework is well-developed), and may be preferred for certain tax structures (some investment funds prefer LP treatment). LP disadvantages: the general partner has unlimited personal liability (unlike all members of an LLC), the filing fee is higher ($925 vs. $25 for an LLC), and the structure is less flexible (the general partner-limited partner distinction creates a rigid management structure). Most Florida practitioners now recommend LLCs for new ventures because: all members have limited liability, the operating agreement provides maximum flexibility, and the LLC can elect any tax treatment.

Question 3

What is a family limited partnership in Florida?

Accepted Answer

A family limited partnership (FLP) is an LP created by family members for estate planning and asset protection purposes. Structure: the parents serve as general partners (maintaining control of the family’s assets), the children (or trusts for the children) serve as limited partners (receiving ownership interests without management control). Benefits: valuation discounts (limited partnership interests are discounted for lack of control and lack of marketability, reducing the taxable value for gift and estate tax purposes; discounts of 20-40% are common), asset protection (creditors of a limited partner can only obtain a charging order, not direct access to the partnership’s assets), centralized management (the general partners maintain control of investment decisions), and income shifting (distributing income to family members in lower tax brackets).

Limited Partnership (LP)

Limited Partnership (LP) in Florida

Formation

LP vs. LLC

Family Limited Partnership

Related Terms

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