Pasley and Singer Law Firm, L.L.P.

Serving Story County and Central Iowa since 1906

323 6th St.
Ames, IA 50010-0664

Phone: (515) 232-4732

ESTATE PLANNING :: Back to Practice Areas

I. Overview
II. Wills and Trusts: Wills
III. Wills and Trusts: Trusts
IV. Asset Protection
V. Estate Planning and Elder Law
VI. Powers of Attorney
Frequently Asked Questions


Asset Protection

An important part of estate planning is trying to keep your estate intact to the greatest possible degree. This does not mean the utilization of secretive and unethical means; there are a number of legal and charitable ways to protect your property for retirement or your estate. Asset protection is complex and requires knowledge of a number of legal concentrations. You should consult an experienced attorney before initiating an asset protection plan.

An important tool for this purpose is a family limited partnership, or FLP. An FLP is arranged like a traditional limited partnership, but generally includes family members. The usual arrangement of an FLP makes the parents “general partners” while the children are designated as “limited partners”, who receive a share of profits but no control over the partnership’s decisions.

The General Partners (or parents) are responsible to control the operations of and make financial decisions for the FLP. They can also receive a management fee out of the FLP’s income. Upon formation, the parents own all general partner and limited partner interests, but give shares to their children using the annual gift tax exclusion. Under federal law, the general partners can maintain control over the FLP even if they control only one percent of the FLP’s assets.

An FLP can allow you to avoid the estate tax credit, by providing annual share gifts. Additionally, because there is no market for shares in the FLP, a gift of FLP assets may be appraised for tax purposes at far below the dollar price, or “discounted”. It should be noted that steep discounts can result in an IRS challenge. As a result, some attorneys have begun crafting LLCs to accomplish the same goals as an FLP.

An FLP can also help protect assets from creditors upon death, within limits. Most states have adopted part or all of the Revised Uniform Limited Partnership Act (RULPA). Under RULPA, a creditor can petition a court for a “charging order”. This allows a creditor to receive any income from a partnership due to the individual who owes the creditor, but forbids a creditor from assuming control of a partnership. The same rules apply to creditors pursuing debtors’ interests in LLCs.

In many instances, it is possible to transfer the ownership of an asset to a spouse. This makes it unavailable in most instances to creditors. Many people have actually transferred the vast majority of their assets to a trust, foundation, or other entity. They own little in their own name, and assets controlled by the new entity are not subject to any claims against the individual.

Asset protection, done legally, is very different from actions taken in order to commit fraud against creditors or the government. It is vital to have the advice and assistance of an attorney who has experience in estate planning.

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Pasley and Singer Law Firm, L.L.P., is an Iowa general practice law firm with practice including, but not limited to  Administrative Law, Adoption Law, Agricultural Law, Alternative Dispute Resolution, Banking Law, Business Law (including business organization, partnerships, limited liability companies (LLCs), incorporations, and sales of businesses and business assets), Civil Rights, Commercial Law, Construction Law, Corporate Law, Criminal Defense, Elder Law, Employment Law, Family Law (including divorce, prenuptial agreements, child support, child custody, dissolution modification), Government, Government Contracts, Litigation, Personal Injury (including Motor Vehicle Accidents and Wrongful Death), Product Liability, Professional Negligence Law, Real Estate (including mortgage loan closings, IRC Section 1031 exchanges, subdivisions, platting, condominiums, and cooperative housing), Municipal Law, Taxation Law and Tax Preparation, Wills, Trusts, Estate Planning & Probate Law (including financial and medical powers of attorney, guardianships and conservatorships, trust administration, and estate administration), Workers Compensation, Zoning, Planning & Land Use

The offices of the Pasley and Singer Law Firm, L.L.P., are located in Ames, Iowa. The lawyers and staff of the Pasley and Singer Law Firm, L.L.P., serve clients throughout Iowa, including the cities of Ames, Nevada, Gilbert, Huxley, Slater, Zearing, Story City, Roland, McCallsburg, Colo, Cambridge, Sheldahl, Des Moines, Cedar Rapids, Fort Dodge, Waterloo, Marshalltown, Boone, Webster City, Eldora, Grundy Center, Newton, Adel, Eldora, Ankeny, Johnston, Indianola, Cedar Falls, Jefferson, Marshalltown, Clarion, Knoxville, and the communities that make up Story, Polk, Linn, Webster, Blackhawk, Marshall, Boone, Hamilton, Jasper, Dallas, Hardin, Warren, Greene, Wright, and Marion counties.