Protecting Business Assets Through A Limited Partnership
If you own a business, you may consider creating a limited partnership to keep your business and your personal finances safe. At Scott + Hespen Law, PLLC, we will learn about your personal priorities as well as your business goals to help you make the best decisions possible.
What Is A Limited Partnership?
This type of business entity contains both one or more general partners as well as one or more limited partners. General partners and limited partners serve different roles, and our estate planning lawyers can help you understand how to use these roles effectively.
The differences between general partners and limited partners include:
- Control over the business: General partners can make administrative decisions for the business, whereas limited partners act like investors; they can only provide funding without having actual control over the business.
- Personal liability protection: Creditors can hold general partners personally responsible for business debts, but they cannot hold limited partners accountable for business debts exceeding each limited partner’s investment.
As opposed to some of the other business formation options, family limited partnerships can particularly serve parents who want to pass down their business to their children. To learn about how to protect a business with significant value, speak to our experienced attorneys about your options.
How To Benefit From A Limited Partnership
In addition to the advantages that a family limited partnership may provide while you own the business, it can also protect your loved ones’ inheritance. Upon forming a limited partnership, the assets that partners contribute belong to the partnership, which is an important protection in life as well as in probate.
Most notably, limited partnerships can minimize estate taxes and protect assets from creditors. As your business grows, you may gift business interests to your limited partners at a reduced tax rate while keeping the assets within the partnership. If your children become your limited partners, these gifts could be a strategic alternative to traditional estate planning methods.
However, it is critical to have comprehensive information about this method before deciding. We can assess your situation and explain how this option could affect your business and your loved ones’ inheritance.
Consult Us To Assess Your Business Succession Options
Based in St. Paul and serving families throughout Minnesota, Scott + Hespen Law, PLLC, has the knowledge and resources to guide you. Call 651-968-1457 or email our team to schedule a business succession planning consultation.