Limited Partnerships Explained: How to Use Limited Partnerships

Do you want complete asset protection for your Limited Partnership? Learn how to safely preserve family assets for the next generation without putting the General Partner at legal risk. In this Whiteboard Session Garrett Sutton walks you through the best legal practices with easy to understand diagrams and examples.
Without the proper legal structure, General Partners that manage Limited Partnerships incur all the risk of the assets owned by the LP. Garrett Sutton explains how setting up a General Partnership as a Limited Liability Company (LLC) or a Corporation that is registered with the state provides legal protection against lawsuits that threaten the General Partner's property.
Garrett Sutton also explains why Limited Partnerships are ideal for passing down family assets. A well constructed Limited Partnership will allow the kids to own the property while still allowing Parents to manage and protect the property and assets contained within the Limited Partnership. Being a manager of a Limited Partnership also can have its advantages, as Mom and Dad can legitimately use the Limited Partnership to pay for medical expenses, home office expenses or vehicle expenses, while they act as the General Partner.
Did you find this video useful? Let us know in the comments below.
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DISCLAIMER: The contents of this video are NOT LEGAL ADVICE and do not apply to your specific circumstances. This information is provided for general informational and educational purposes only. Viewing this video DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP. We highly encourage you to seek professional legal advice before acting or relying on any information contained in this video.

[@frankm4243]

Awesome explanation on limited partnership & general partnership!

[@arnoldvandenhurk]

Great explanation of LP. Thank Garrett to share your knowledge!

[@CorporateDirectInc]

Delighted to help Arnold.

[@governementisthebest]

beautiful explanation

[@RonnieHector]

Your books have helped me a lot, thanx mr Sutton you are my mentor.

[@CorporateDirectInc]

Thank you Héctor! I am delighted to help you in your ventures.

[@tmac8623]

I've read all of your books, you're amazing. Will definitely be hiring you and Mr. Wheelwright

[@CorporateDirectInc]

Thanks Ronald. So happy to hear that the books have helped you!

[@jaysant6958]

I'm new to this but if you are both the LP and the GP (through an LLC), why would you invest into the LP since only that money is exposed and not actual property? Probably a dumb question but like I said, I'm barely learning these things.

[@lovelife655]

great clear and helpful video , thank you

[@CorporateDirectInc]

Glad it was helpful!

[@esthergaldamez4537]

Thank you for explaining it so well, we are learning about this in class and I wasn’t understanding

[@CorporateDirectInc]

You're very welcome!

[@budstep7361]

Great video!

[@donsergio2406]

The video is truly educating. However, the example at 2:50 got me confused: to form an LP to pass assets to “the kids” implies that they need to sign a contract (LP formation). Since contracts signed by minors are voidable, how does it stand in the case of a lawsuit?

[@wpaia]

great video. thank u so much

[@CorporateDirectInc]

Thank you wpaia! I'm so glad you found this useful. For more on this, I've written a related article.

[@ProJayMyers____]

Just taught me more on how to build wealth. But still more learning to do

[@rushanejclarke]

Thank you

[@nathanielm9017]

Can a person be a Limited partner and own/operate the llc (GP)?

[@e.l.876]

As I understand it from Investopedia, probably and, technically, yes. Probably: Unless the state has a rule against it, you should be able to join the LP as yourself, while being listed as a manager of the LLC acting as GP. I'd expect the law to see you as an individual person, separate from the GP: an entity (LLC) whose interests you manage on its behalf. But again, some states my object to that. Technically, yes: but there shouldn't be a need to do that. If you manage the LLC, then (as I understand it) your liability is already limited by default. That's why you would use the LLC, instead of yourself, as the GP. However, you may want clarity (from a lawyer or CPA) on whether taking a larger stake in ownership as GP is wise per your goals and tax situation.

[@zoranpuljic8295]

Hi Garrett, thank you for the great presentation. I am a non US resident/citizen. Planing to become a GP in a US based LLC. Business operations will be conducted in my country (Europe, non-EU). Will I have to pay personal taxes in the US? Thanks a lot.

[@Keesha-may75]

happy New Year 🎉

[@ryantunison5433]

As a general rule, should/does the LP need to file Form D with the SEC and whatever forms for State?

[@AlexYursha]

Hi Garrett, Thanks for your books and videos! I learned a lot from them. I didn't understand in this video how to use LP to pay for medical expenses. Is it covered in any of your books? Thank you again!

[@sonomacalendar9949]

just ignore them

[@ahandymanishere]

Thank you for your video! I am an AC technician but don't have an AC contractor license. I have a limited partner who has a contractor license to benefit from? That way I can pull permits and operate my AC technician certificate without having to have the contractor license.

[@sjkeclipse]

So I started a fitness clothing line, I got my LLC, I’ve been purchasing product with my paycheck little by little, and now I’m running into issues with bills, I have sold some product just not enough yet, there is huge potential for it to take if I’ve got people working on building social media for pages for me,. My neighbor has expressed interest in a partnership, he owns his own chauffeur business so he wouldn’t be as involved in the sewing and every day running of the company and brand so I would like to use them as a silent partner, /Financial partner, what do you recommend or suggest

[@Editnamehere]

Great video thanks. Do you have any videos on how to go about filing and connecting these entities? And how would you add limited partners if they want to invest?

[@CorporateDirectInc]

Unfortunately, I do not have videos on the specifics as every state's procedure is different and everybody's situation is different. It would be very difficult to make a one size fits all video. We do provide formation services and offer a free 15 minute consultation with an Incorporating Specialist to get you started if you would like for us to take care of it for you. If you need legal advice, I provide consultations for a reasonable fee as well. Check out CorporateDirect.com or you can call the office 800-600-1760.

[@lapurdy71]

Is this method in dispute with Powell Estate vs. Commission?

[@urbanlouisvillechessclub4503]

I am still trying to figure this out. Can this set up - Limited partnership/general partnership buy, hold and sell stock? Bonds?? Index funds???

[@JLW667]

Great Video

[@CorporateDirectInc]

Thanks!

[@WithFaizanKhan]

Thanks! Short to the point & a nice example too :)

[@baizuramustapa3199]

LPLLl

[@baizuramustapa3199]

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[@baizuramustapa3199]

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[@baizuramustapa3199]

LPll

[@baizuramustapa3199]

LLl

[@oleopathic]

How can a general partnership be setup such that one partner (of two) retains their annual qualification for medicaid as the general partnership earns a profit on interest on private money loans throughout the year?

[@sovinea1743]

What is Limited liability partnerships?? Can you explain about it?

[@NoahAvery96]

I’m a real estate professional on the brokerage side. I have 4 LP investments in apartments. Can I write off bonus depreciation from LP investments towards earned income through real estate sales? I’ve gotten both yes and no responses from qualified people and am trying to clear this up. Thanks!

[@benkaas2265]

If you buy, sell and hold small established business for others can you use a Limited Partnership in California let me know?

[@CorporateDirectInc]

Ben, before giving you legal advice I need to know the specifics. To get an educated answer, sign up for a free 15-min consultation here: www.corporatedirect.com/get-free-15-minute-consultation/

[@pilotmedic]

But what happen if the kids get a lawsuit?

[@PulsechainOfficial]

❤

[@Subicca1]

Can a general partner be foreigner ?

[@reginaldhouse7731]

Explanation if off. I thought mom and dad were LP. A min later they are GP, then they are LP again.

[@JLW667]

2:30

[@leadbenefitdirector664]

#12oyfmoneyrules

[@salaparo2975]

A limited partnership is when more than one person agrees to help you rip off anybody and everybody in sight