We have often heard it said that we live in a litigious society. Any business owner could potentially be the subject of a lawsuit, but some people are more vulnerable than others. For example, physicians and landlords are often targeted by litigious types. All business owners should consider the value of asset protection, but it is absolutely essential for those who are in certain lines of work.
Let’s look at a couple of the legal structures that are typically used by business owners for asset protection purposes.
Family Limited Partnerships
It is possible to protect assets through the creation of a family limited partnership. With a family limited partnership there is a general partner or partners, and there are limited partners. The general partners have exclusive decision-making authority. As the name would suggest, all of the partners are usually members of the same family.
Because all of the partners share in the ownership of the partnership, if any one of the partners is the subject of a lawsuit, assets that have been placed into the partnership would not be subject to attachment. This is why family limited partnerships are valuable for those seeking asset protection.
There is also the matter of estate tax efficiency. If you are subject to the federal estate tax, you could utilize a family limited partnership to transfer assets to family members in a tax efficient manner.
If you would like to learn more about family limited partnerships, we have a valuable resource that you can access through this website. Our firm has prepared a series of special reports, and one of them takes an in-depth look at family limited partnerships.
To obtain access to the report, click this link: Report on Family Limited Partnerships.
Limited Liability Companies
Another asset protection structure is a limited liability company. If a person who has an interest in a limited liability company is the subject of a lawsuit, the assets that are owned by the limited liability company cannot be attached. This protects others who may have interests in the limited liability company.
State laws vary with regard to the recourse that a litigant may have, but limited liability companies do provide a certain degree of asset protection.
In addition to the report on family limited partnerships, we are also offering a report on limited liability companies. This report will give you a solid foundation of information to work with as you evaluate the asset protection structures that are available to you.
You can access the report through this page: Limited Liability Company Report.
Free Asset Protection Consultation
If you are an Indianapolis area business owner who is interested in asset protection planning, contact us to schedule a free consultation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.