Long Island Elder Law & Estate Planning

Business Formation and Asset ProtectionThere are different legal structures that can be used for asset protection if you are a business owner. Asset protection is going to be particularly important to people who are pursuing certain business interests. Landlords would be at or near the top of this list.

When you rent out property, people who are occupying or visiting the property could become injured, and this is an inherent risk that all landlords face. If the rental property is in your direct personal possession and intermingled with your other belongings, you could be personally targeted by a litigant who is injured on the rental property.

Family Limited Partnership

One structure that can be effective for landlords who are looking for asset protection is the family limited partnership. In some cases, you would want to create multiple different family limited partnerships. Let’s look at an example to explain the strategy.

For the purposes of this example, we will say that you own an apartment building and two shopping centers. You could convey each separate property into a different family limited partnership.

As the person creating the family limited partnership, you would be the general partner. You would then add family members to act as limited partners. The general partner is the sole and absolute decision-maker, so you do not have to worry about the limited partners acting independently in a manner that is not consistent with your wishes.

Once the investment properties are conveyed into these respective different family limited partnerships, they are no longer in your direct personal possession. As a result, if you or any other partner is personally targeted by a litigant seeking redress, these investment properties could not be attached via a judgment.

On the other side of the coin, if someone is injured on one of the investment properties, your personal property would be protected. Plus, since you conveyed each investment property into a different family limited partnership, the other two properties would be protected if someone was to sue the partnership that held one of the properties.

A family limited partnership can be a sound asset protection solution, but there are also tax benefits that can be realized if you are exposed to estate taxes.

Learn More About Family Limited Partnerships

We have provided some basic information about the value of family limited partnerships in this brief blog post. If you would like to learn more about them, we have a valuable resource that you can access quickly and easily through this website.

Our firm has prepared a special report that takes the explanation a few steps further. The report is free, and you can visit this page to access your copy: Free Report on Family Limited Partnerships.

Check Out Our Content on Forbes.com

Click this link if you would like to access more of our estate planning and elder law content: Forbes Contributor Mark Eghrari.

 

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About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.