Question

All of the following are characteristics of Family Limited Partnerships (FLPs) and why they make excellent transfer tax vehicles except:

a) Limited Liability
b) Centralized Management
c) Asset Protection
d) Unlimited Transferability

Answer 1

Family Limited Partnerships (FLPs) have several characteristics that make them excellent transfer tax vehicles, including limited liability, centralized management, and asset protection. However, unlike publicly traded companies, FLPs do not offer unlimited transferability.

Step-by-step explanation:

The correct answer is d) Unlimited Transferability.

Family Limited Partnerships (FLPs) have several characteristics that make them excellent transfer tax vehicles:

1. Limited Liability: FLPs provide limited liability to the partners, meaning their personal assets are protected from the business's liabilities.
2. Centralized Management: FLPs have centralized management, allowing for effective decision-making and streamlined operations.
3. Asset Protection: FLPs offer asset protection, safeguarding the partners' assets from potential risks and creditors.

However, unlimited transferability is not a characteristic of FLPs. Unlike publicly traded companies, where shares are easily transferable, FLP interests typically have restrictions on transferability to maintain control over the partnership.