The attorneys here at The Elder and Disability Law Firm provide solutions to business people and professionals that want to take precautions to protect themselves. When you are starting a business or a practice, you should be very discerning about the structure that you utilize. There are certain ways that you can legally establish distinct separation between your personal resources and the actions of your business as a different entity.
One legal structure that is often used is the family limited partnership. As the name would indicate, individuals that are participating in an FLP must all must be members of the same family. The best way to explain is through a simple example. Let’s assume that you are a real estate investor, and you establish a family limited partnership.
As the individual creating the structure, you would be the general partner. You would then add family members to act as the limited partners. The general partner is the only member of the partnership that has any decision-making authority, so you do not lose any control when you convey assets into a family limited partnership.
For the purposes of this example, let’s say that you own four different apartment buildings. Of course, you own your own home, you have an investment account and bank accounts, and other personally owned resources.
If someone was to get injured in one of your buildings, or if there was some other type of lawsuit that targeted the building’s management, you could be held personally liable if you are the direct owner of the property. To prevent this, you could convey it into a family limited partnership. The partnership would own the building, not you, so a litigant seeking redress would have to sue the family limited partnership that owns the building.
You could structure the financing in such a way as to hold very little liquidity, so you could further minimize exposure in that manner.
Since you own a number of different pieces of rental property, you could establish a family limited partnership to hold each one of them. As a result, someone that is suing one partnership would only have one piece of property to go after. It would also be possible to convey your personal property into family limited partnerships for added layers of asset protection.
In addition to the fact that the personal property that is owned by all members of the family limited partnership would be protected if the FLP was sued, there is protection on the other side of the coin. If anyone that is involved in the partnership is personally sued, property that is held by the partnership would be protected.
Download Our Special Report
If you would like to learn more about family limited partnerships and other asset protection structures, like the limited liability company, you are in luck. Our attorneys have prepared a special report on the subject, and it is comprehensive, but very easy to understand.
Best of all, there is no charge for this report. Plus, we have a rather extensive library that includes in-depth reports on many other important elder law and estate planning topics. To see all the titles, including the asset protection report, visit our special reports page and follow the simple instructions.
Attend a Free Seminar
We have scratched the surface in this blog post, and the special report will provide reinforcement and some additional information. This being stated, you can take your knowledge to another level if you attend one of the seminars that our asset protection lawyers have scheduled over the coming weeks. They are free to attend, but we do ask that you register in advance, because space is limited. You can click the following link to check out the schedule: Mount Clemens, MI Estate Planning Seminars.
Schedule a Consultation!
Our doors are open if you would like to sit down and discuss asset protection or any other estate planning and elder law topic with a licensed attorney. You can send us a message through our contact page to request an appointment, and we can be reached by phone at 586-493-7661.