Failing is never fun. Though an optimistic person will tell you that true failure is when you don’t learn from your mistakes, I’d say it is a fair notion to suggest that no one would volunteer to have to learn from a mistake. In other words, it costs less to learn from the mistakes of others, than to learn from your own mistakes. Benjamin Franklin once said, “by failing to prepare, you are preparing to fail”. Life is filled with opportunities to succeed but only for those who will be prepared when opportunity comes knocking at their door. When it comes to protecting your assets, preparation is as well important. What are you doing today to prepare your assets for tomorrow? Thus, discussing how to properly prepare one’s assets for future success becomes a much-needed conversation.
Assets are supposed to add value and not take away from what you have spent years building to enjoy. Poor preparation can not only lead to forfeiture of your assets, it can also lead to a demoralizing experience of seeing your hard-earned work slip from the grasp of your hands. One of the first steps to preparing your assets is understanding the different vehicles used to shield your assets in a litigious society. It’s like wrapping a Christmas gift to send to your loved one across state lines. You don’t simply tape the shipping slip to the actual gift. You first wrap the gift, package the gift in a secured box, then ship it with a trusted mail carrier like UPS, USPS, or FedEx. Sometimes, you even pay for insurance in the event the package gets lost, stolen, or arrives damaged.
Limited Partnerships (LP) have historically been regarded as the preferred investment vehicle and business organizational tool. Unlike other types of entities, like limited liability companies, corporations, and general partnerships, an LP is a type of entity that provides by-far the highest level of Asset Protection domestically in the United States. Depending on your state of residency, LPs are the ideal central nucleus to your Asset Protection planning. Using an LP as the central nucleus to your planning gives ease of strategizing and structuring of your assets in a way that affords you the firewalls to evade susceptible lawsuits. An LP would hold the majority if not all of your business interests, investments, cash, stocks, and bonds.
The idea of using an LP is to control your entire financial house through the general partner of the limited partnership. While you control everything, you directly own nothing. This makes LPs a very attractive entity type for clients who want to build a formidable Asset Protection plan to plug and earn. As the LP grows, with proper money management process, your financial house grows as well. It’s been that way since the early 1900s and though tested and tried, LPs remain strong.
Historically, prior to the inception of limited partnerships, general partnerships were the go-to model for organizing and structuring a business. You could easily form a general partnership by agreeing to hold yourself out with another person as a partnership. No corporate formalities are required. However, due to the unlimited personal liability and fragility of its operations, once LPs were recommended into practice, general partnerships no longer were the ideal form of entity to adapt. LPs are structured with two classes of partners, general partners and limited partners. Unlike general partnerships, LPs afford their limited partners with exactly what the label suggests, limited liability. Where partners in a general partnership take on unlimited personal liability for their acts and the acts of their partners, limited partners in an LP do not have this same vulnerability. In addition, limited partners in an LP don’t have the authority to control or dictate the activities of the limited partnership. This dichotomy has allowed families for decades to protect their legacies under the tutelage of a limited partnership while giving a interest to their children setting them up for when they past.
Today, LPs are being used nationwide as the default main holding company to an individual’s Asset Protection planning. In addition to the reasons already discussed, LPs are also widely preferred for their tax advantages, ability to centralize control, flexible structure for growth, succession planning, and estate planning. When it is all said and done, when planning for the future of your assets, one should consider how they choose to title their assets. Knowing the best entity form that provides not only the highest level of protection and possibly other benefits is critical to ensure the longevity of those assets. There are many different types of Limited Partnerships, so it’s crucial to consult with an attorney to determine which is the best for your needs and desires.
What are you doing today to prepare your assets for tomorrow? As it is unknown when you’ll get a flat tire, it is similarly unknown when something might happen that could potentially tie up your assets due to a lawsuit or you’re unable to liquidate in need of cash due to an emergency. Being proactive today can give you the freedom you need tomorrow. At The Presser Law Firm, P.A., we specialize in building the best infrastructure to house our clients’ assets. Tailored to each individual’s goals, we can guide you and make your assets resistant to creditor claims. The Presser Law Firm, P.A. can be the architect to your wealth building.