Although not officially recognized by the IRS, the term "Family Limited Partnership" or "FLP" is frequently used by financial planners to describe limited partnerships that are set up specifically to hold family businesses or investments. The idea is that individuals can use an FLP to bestow limited partnership interests as gifts to their children.
The family limited partnership is an extremely popular wealth transfer strategy. With an FLP, individuals can reduce the taxable value of their estate by placing their assets in a limited partnership. Then, ownership interests can be allocated to other family members. For parents, it's an effective way to lower their tax burden, establish a management structure, and ensure family businesses or personal assets remain in the family.