Claire
 In April 2025, the UK's inheritance tax rules changed, making trust planning less appealing. However, for Americans, trusts are still an option because of the impact of the US–UK double tax treaty. Where trusts are not suitable, family limited partnerships can provide an effective alternative for tax and succession planning.

Jaime
 US-connected families often ask about family investment companies. The difficulty is that these are typically treated as passive foreign investment companies for US tax purposes, which can result in higher tax rates and additional reporting requirements for US family members. For this reason, partnerships are often the preferred option.

Kate
Family limited partnerships are particularly useful for US–UK families because both countries generally treat partnerships as transparent for income and capital gains tax purposes. This can make it easier for American limited partners to claim foreign tax credits than would be possible through a trust or corporate structure. Additional care is required where limited partners are under 18, and structures can be tailored to address these circumstances.

Claire
 Transferring a limited partnership interest is a gift for both UK and US tax purposes. For individuals already within the UK inheritance tax regime, there is generally no inheritance tax on the gift provided they survive for seven years after making it. However, the transfer is a disposal for UK capital gains tax purposes, whereas it is not treated in the same way in the US.

As a result, partnerships are often funded using cash or assets standing at a low gain to avoid mismatches in tax base cost. It may also be possible to fund a partnership using non-UK funds that were previously protected by the remittance basis, which can be beneficial for planning purposes.

Jaime
Unlike the UK, the US imposes lifetime limits on gifting. Partnerships can therefore provide an effective way for US individuals to use their lifetime exemptions by gifting partnership interests to other family members.

When establishing partnerships for US individuals, certain US restrictions must be considered. Some powers typically associated with a general partner interest can cause gifts to be brought back into an estate for estate tax purposes. Various structuring options can help mitigate this risk.

Kate
 Family limited partnerships can also help introduce younger family members to wealth stewardship, as they may need to file their own tax returns and put wills in place to deal with their partnership interests. Overall, family limited partnerships offer a flexible, controlled and tax-efficient method of gifting assets, particularly where both US and UK considerations apply.