How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Dimitry K., Esq. Your Own Question
Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
18572087
Type Your Business Law Question Here...
Dimitry K., Esq. is online now
A new question is answered every 9 seconds

I want to place my daughter as a limited partner in my LP.

Resolved Question:

I want to place my daughter as a limited partner in my LP. I want full control of the assets and I will be the General Partner. I have listed myself as owning 1% and she owns 99%. I have given her no management authority, so doesn't this make your a Limited Partner?
Submitted: 6 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 6 years ago.
Thank you for your question.

No, not quite--to make her a "limited" partner, you must have two types of stock or different conditions within the articles of partnership that you will drafting. You may also want to draft the articles to require unanimous shares for voting in on new motions and petitions in front of the partners. Otherwise even with your 1% share, your daughter will be able to overrule you possibly not as an officer in the company, but as a board member, and quite possibly attempt to "fire" or replace you simply based on her share of the assets.

In your partnership agreement, consider having one section for Contributions, one for General Partners, and one for Limited Partners--that will cut down on the confusion.

Edited by Dimitry Alexander Kaplun on 9/6/2010 at 8:17 AM EST
Customer: replied 6 years ago.
What do you mean by:

No, not quite--to make her a "limited" partner, you must have two types of stock or different conditions within the articles of partnership that you will drafting


Expert:  Dimitry K., Esq. replied 6 years ago.
Thank you for your follow-up.

A "general" or "limited" partners are generally added differently to an entity. Therefore you may either have two types of stock (if you set up an LLC), or have two different conditions as to how general and limited partners are added. For example naming a general partner, and in the partnership incporporation document will be sufficient to state that this is the only general partner. At the same time, additions of new general or limited, or withdrawal of limited partners must also be discussed.

Good luck.

Edited by Dimitry Alexander Kaplun on 9/6/2010 at 3:51 PM EST
Customer: replied 6 years ago.
I have an asset protection plan to protect my business assets:

1. I set up LLC in VA with an LP as the only Member.The LP was set up in DE.

2. I am the General Partner of the LP. I have listed my daughter as the Limited Partner at 1% with no management. I still have full control of the LP.

3. I have set up unanimous voting.

What else should I do to make sure that no one can get my assets in case they sue me.
Expert:  Dimitry K., Esq. replied 6 years ago.
Consider giving your daughter more than 1% of the LP partnership. The more you dilute your own ownership, the less likely it will be that you can be sued for alter ego and have an attorney attempt to pierce the corporate veil and pursue you directly.

Edited by Dimitry Alexander Kaplun on 9/6/2010 at 6:14 PM EST
Dimitry K., Esq. and other Business Law Specialists are ready to help you
Customer: replied 6 years ago.
How could I set up s spendthrift or asset protection trust?
Expert:  Dimitry K., Esq. replied 6 years ago.
I am sorry, that is out of scope of your original question, which dealt with setting up an LP, and not a trust. For that I suggest you open up a new question and post it our Legal category.

Good luck.