For years, Rupert Murdoch and his son, Lachlan, have been fighting in court to rework the succession plan the family had initially planned for News Corp. The goal was to give substantial control to Lachlan when Rupert died, so he could continue his father’s legacy of being a conservative media company.
On September 9, the legal fight ended with a deal in which Lachlan and Rupert Murdoch bought out Rupert’s other three children for more than $1 billion each.
The drama surrounding the succession has been a media sensation for some time, even spawning the TV show Succession.
Of course, that was understandable as this was a battle over billions of dollars and control of one of the world’s most well-known companies.
While most businesses won’t have the outside scrutiny of News Corp., the potential for drama, court cases and litigation is present during any succession.
While it may not prevent legal fights, establishing a Family Limited Partnership may be a great solution to ensure a business survives the death or retirement of its founder.
Think about this. A study on succession talked about in this article from Business News Daily summarizes that a “founding entrepreneur’s death wipes out, on average, 60% of a firm’s sales and cuts jobs by roughly 17%. Also, these companies have a 20% lower survival rate two years after the founder’s death compared to similar firms where the entrepreneur is still alive.”
Don’t let that happen.
The attorneys at The Orlando Law Group specialize in helping businesses structure their succession planning in Orlando, Sanford, Winter Garden and Kissimmee and are here to help you set up the tools and programs that can keep your company running for generations.
What is the Family Limited Partnership?
Family Limited Partnerships, or FLPs, are not a new concept, but it is one that has been shown to be effective in transferring wealth and business ownership with limited tax implications.
For this article, we’ll focus on how this can be used to transfer ownership of a family company.
The FLP is fairly simple and works like any other limited partnership structure for a business.
As the name says, it is only family members who can be a part of the partnership and this is the immediate family, so a third cousin twice removed cannot be a part of a Family Limited Partnership.
The biggest part of the FLP is designating who the General Partner and the Limited Partners are, and how those change when the general partner dies. The difference is basically that the General Partner has control of the partnership and the Limited Partner does not.
How does this work for succession planning?
Let’s give a hypothetical situation to show how this works.
Ryan owns several restaurants. While each restaurant has its own company for liability purposes, Ryan owns an umbrella company that has the controlling interest in each of them.
While he’s still young, his children are starting to work in the restaurants. One has just graduated from high school and is working as a hostess at Ryan’s fine dining restaurant. Ryan’s other child graduated from college with a degree in marketing and has started working on the restaurant group’s website, social media and events.
Both children have an interest in running the business when Ryan decides to retire, and Ryan has put together a plan to help his children learn all aspects of the company.
To help the transition and ease the transfer over time, Ryan sets up a Family Limited Partnership. He labels himself as the General Partner and puts his two children and his wife as limited partners.
Over time, and in accordance with tax law, Ryan transfers shares in this FLP to his children, giving them more and more ownership of the company. When it’s time for Ryan to retire, he simply needs to change his status to a Limited Partnership and change his children’s status to General Partnership.
Following the steps and procedures which were set up in the company documents and bylaws at the beginning, and reviewed on a regular basis.
Be Careful with FLPs
Family Limited Partnerships are often challenged by the IRS when they believe it is just being used to shield assets, but just following a few simple rules can help protect assets from the government.
First, make sure there is a strong partnership agreement that clearly shows all the rules and regulations for the partnership. Here are a few things to ensure are in the agreement:
- General Partner authority and duties.
- Limited Partner rights and restrictions (no management).
- Distribution rules.
- Buy-sell or transfer restrictions.
- Succession provisions for GP replacement.
Then, the FLP should be properly funded with business assets – not personal assets. Even if the primary office is in a home, the primary residence should not be intermingled in the FLP.
After the Family Limited Partnership is set up, it is essential to treat it like any other business, including keeping great financial records and holding regular meetings. Make sure any distributions follow the rules of the partnership documents.
Finally, make sure it follows all of the statutes in the state where the partnership is registered. In Florida, any partnerships for businesses need to follow Florida Statutes 160.
Like any type of estate planning and succession planning, we strongly suggest that anyone work with their attorneys to ensure a Family Limited Partnership is done properly and every step is taken to create a smooth transition when the time comes.
The attorneys at The Orlando Law Group help with all types of legal issues for business owners and individuals in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on September 10, 2025 by The Orlando Law Group
