As a Ventura County estate planning law firm specializing in family partnerships, our firm commonly receives questions about family partnership options. We have a team of experts with the legal knowledge to answer questions about the process of choosing a family partnership, and what the benefits of proper estate planning can be.
Our firm can provide expert legal services as estate planning attorneys. We are a Southern California based law firm in business since 1985. We specialize in family partnerships and estate planning matters.
To learn more about family partnerships, or if you would like a free consultation to learn if a family partnership is right for you, please do not hesitate to contact us at (805) 482-2282, or e-mail us.
How does the family partnership discourage creditors?
Unless the family partnership is set up when current debts are causing serious problems, the family partnership may protect family assets from creditors. The reason is if a creditor obtains a judgment against you, the creditors can generally only seize cash or assets distributed out of the partnership. This is called a “charging order.” You can choose as managing partner to not distribute partnership profits, and so the creditor with a charging order has the unpleasant result of having to pay income tax on profits the creditor is not currently receiving.
The creditors cannot seize assets of the family partnership, unless it is dissolved. Of course, the partnership is structured so it is dissolved only with the consent of all the partners.
However, please note that the California courts are the most liberal at allowing a creditor to seize a partnership interest. I personally do not believe one should create a family partnership solely for asset protection purposes. However, such protection, as it is, is an advantage of a family partnership. Therefore, assets in a family partnership, in general, are protected from creditors.
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