Asset Protection Planning may take on a more complex nature through the use of specialized entities as a means of holding title to assets.
The Family Limited Partnership is one example of a partnership which provides Asset Protection for Limited Partners.
The transfer of assets to a Partnership results in the ownership of a Partnership interest, rather than an undivided portion of the underlying assets.
Generally, creditors of one Limited Partner may not reach the assets of the Partnership or of another Limited Partner.
Likewise, the creditors of the Partnership may not reach the other individually owned assets of a Limited Partner.
Rather, such creditors must be content with a “charging order,” merely entitling them to an interest in Partnership profits when actually distributed to the Limited Partner.