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Family Limited Partnership
The asset protection attorneys at the Farr Law Firm make recommendations and implement strategies to minimize the exposure of clients’ assets to creditors, and one key method of protecting assets involves the family limited partnership.
What is a Family Limited Partnership?
A Family Limited Partnership can provide the highest form of asset protection currently available for non-homestead property under Florida law. In general, a limited partnership provides for the division of ownership among groups of partners that include general partners and limited partners. The general partner retains absolute control over the partnership property and the business of the partnership.
Limited partners maintain an interest in the partnership and receive distributions, but exercise no control over the assets held in the partnership. Creditors obtaining a judgment against the holder of a general or limited partnership interest in a Florida limited partnership obtain only a limited remedy known as the charging order.
The Importance of the Charging Order to Asset Protection
Once issued by the court, a charging order will entitle the judgment holder to receive whatever distributions or other payments that partner would otherwise receive until the judgment is paid in full. However, the charging order will not permit the creditor to reach or force liquidation of partnership property or exercise control over partnership business.
During a time that a judgment is in place, the general partner can simply refuse to make distributions to the partners, thereby denying the judgment creditor any benefit from the charging order. This is significantly more advantageous than holding assets individually where they are at risk of outright seizure by creditors.
If the Farr Law Firm can be of service to you or your business endeavor in the protection of assets, please feel free to contact the firm to schedule an appointment at (941) 639-1158 (Punta Gorda office) or (941) 460-9334 (Englewood office). It is our honor to serve you.
