“For every 60 minutes you spend making money, spend 60 seconds thinking about how to protect it!”
Boca Raton, Florida (PRWEB) September 22, 2015
Lawsuits have truly become the next big business – becoming educated on how to protect assets in this litigious society is crucial. One lawsuit could leave a person homeless, bankrupt and emotionally beyond repair. Learn how the family limited partnership can help shield assets from creditors by reading Hillel L. Presser, Esq., MBA’s tips below.
1. Recognize That Assets Need Protection
Asset protection is the legal process of titling both your personal and business assets to put them beyond the reach of future potential threats and creditors. A good asset protection plan should protect all of your assets from any and all financial threats. The real trick in today’s day and age is not to make money but to keep it.
2. How to Use a Family Limited Partnership to Protect Assets
The family limited partnership (FLP) is a limited partnership (LP) owned by family members, or family controlled entities (which may include revocable living trusts). The FLP is commonly used for protection because it can protect a wide range of assets, maximize your creditor protection, and give you and/or your family continuing control over your assets.
3. Understand Why You Should Not Use the Traditional General Partnership for Asset Protection
Limited partnerships are a legislative variation of the general partnership (GP). General partnerships have existed for thousands of years and are created in common law. They are typically small businesses wherein each partner may manage, act for, and bind the company, thus giving each partner unlimited liability. The limited partnership, on the other hand, is created by state law, which varies from state to state. The LP has a general partner, who has unlimited liability, but also has one or more limited partners, who only have liability up to the extent of their investment in the limited partnership.
4. Why the Family Limited Partnership is the Preferred Entity Choice
As commercial law developed, general partnerships gradually began to demonstrate some glaring shortcomings. Among these deficiencies is the fact that one partner can make a decision that could financially harm not only the partnership as a whole, but the personal wealth of the other partners. Therefore, if one partner obligates the partnership to debts it cannot pay, the personal wealth of all of the partners is at risk of being forfeited to that debtor partner’s creditors. The same is true with debts arising from lawsuits. Namely, if one partner is dishonest or commits a tort while working for the partnership, then a creditor could obtain a judgment against the wrongdoer partner, the partnership as a whole, as well as each individual partner. Accordingly, such high degree of liability exposure makes the general partnership not an ideal strategy for asset protection.
The family limited partnership is an excellent strategy for protecting liquid assets (bank accounts and other assets that can be converted into cash quickly) and serving as a second layer of protection for your operating business entities and real estate properties including, non homestead vacation homes, residential rental properties and commercial properties. Another reason why the family limited partnership is a great tool for asset protection is because in most states, like Florida, the FLP is charging order protected. In other words, the creditors of the limited partnership are limited to profits or distributions actually paid to the limited partners (which may be withheld by the general partners in good asset protection planning).
About The Presser Law Firm, P.A.
The Presser Law Firm, P.A., Asset Protection Attorneys, represents individuals and businesses in connection with the establishment of comprehensive Asset Protection plans that incorporate both domestic and international components.
Visit the Law Firm’s website (http://www.AssetProtectionAttorneys.com) for access to educational material on asset protection, business law, estate planning, and probate including webinars, articles and detailed legal explanations.
Contact The Presser Law Firm, P.A., Asset Protection Attorneys for a Complimentary Preliminary Consultation with one of our attorneys or to receive complimentary copies of our latest best-selling books on Asset Protection.