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Family partnerships

A family partnership is a term used to describe a partnership between members of a family, often parents and their children. It can be a useful vehicle for holding investment and/or trading assets for the benefit of a number of family members.

The family partnership structure enables a structure where parents retain a degree of control over any investments or trading assets they wish to share with their children during their life-time, but where the value of the partnership is dispersed between all partners in the partnership. However, partners in a family partnership can also comprise of corporate entities rather than purely individuals.

Why form a family partnership?

The benefit of a family partnership is that it allows parents to transfer assets to their children today and pay tax at today’s current market values while still retaining control of the assets. No tax charge should arise at the time the children obtain control of the partnership. This is because they should be treated in tax terms as being owners of their respective interest in the capital account of the limited partnership from the date when the assets were first subscribed.

Parents can transfer assets into the partnership that they believe will accumulate greater value into the future, while retaining control over these assets, and thereby limiting the exposure to gift or inheritance tax for their children in the future should the value of the assets grow.

How is it structured?

A family partnership can be formed with the child/children becoming the majority partner in value terms in the partnership. Each partner’s contributed capital generally determines the partnership shares. It is common to see this as 90% for the children and 10% for the parents, however it is for the partners to agree. A partnership agreement is drafted and put in place to regulate the running of the partnership. If any of the partners are minors then his/ her parents (trustees) normally enter into the partnership agreement on their behalf.

There should be no tax considerations on the initial registration of the partnership. Careful legal drafting will be essential to this step of the process and legal advice should be sought.

A partnership agreement should be prepared which will set out terms of the partnership. The partnership will also be obligated to register for taxes, file its tax returns and depending on the type of partnership established file accounts on public record with the Companies Registration Office (CRO).

Types of partnership

Limited partnership

Benefits: Liability of all partners except for at least one is limited to the amount that the partner has contributed meaning that they should not be liable for the debts of the partnership beyond their capped limit.


  • must register as a limited partnership;
  • must file annual accounts; and
  • must register trading name as a business.

General partnership

Benefits: Less administrative burden than a limited partnership, however every partner is liable for the debts of the partnership without limit. Personal assets of the individual held outside the partnership are not protected.


  • no accounts filing requirement; and
  • must register trading name as a business.

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