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ASSET PROTECTION FAMILY LIMITED PARTNERSHIP (con’t) So, How Do They Work? The first thing we do is legally and properly form an FLP that is structured to your specific needs. This takes some important planning. Second, the partner agreement has to be drawn up and the ownership carefully decided. Third, the assets have to be properly transferred into the FLP. Once all of this has been done, it becomes very hard for a creditor to attack your FLP. If he gets a judgment against you, that still does not give him the right to take your assets in the FLP. He has to go back to court and get another judgment called a charging order. That allows him to get your share of the distributions from the FLP. If you do not distribute anything, then the creditor gets nothing. He cannot take your position and run the FLP. He cannot force you to distribute assets. If the FLP has undistributed profits, the creditor gets a k-1 and must pay tax to the IRS on money he never received and probably never will receive. As a result of this, few creditors ever go for a charging order. Thus your assets are safe! Your partnership agreement is confidential and is not filed with any government agency. Only you know what it says and only you know who the limited partners and what assets are owned by the partnership. As FLP does not have double taxation like a corporation so you do not have to worry about that. It is truly an excellent domestic protection tool when it is properly structured and implemented.
	F. Darrell Lindsey U.S. State Licensed Agent/Broker State Approved Captive Manager
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