Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which partnership type is organized primarily for family affairs?

1. Registered partnership

2. Family limited partnership

3. Sole proprietorship

4. General partnership

The correct answer is: Family limited partnership

A family limited partnership is specifically structured to manage family assets and facilitate family affairs, often used in estate planning. This type of partnership allows family members to jointly manage investments, properties, and other assets while also providing a way to transfer wealth within the family while minimizing estate taxes and protecting family assets from creditors. The arrangement typically involves general partners, who manage the partnership, and limited partners, who contribute capital and receive income but do not have a say in daily management, ensuring that family control remains centralized. This structure is advantageous for families looking to maintain control over their assets while benefiting from certain legal protections and financial efficiencies. The other types of partnerships mentioned serve different purposes. A registered partnership is generally a formal partnership recognized by the state, a sole proprietorship is a business operated by a single individual without formal partnership structure, and a general partnership involves two or more individuals sharing ownership and operational responsibilities equally. Each of these structures does not prioritize family affairs to the same extent as a family limited partnership, which is specifically tailored to address familial interests.