Goblue10 wrote:My spouse has entered a general partnership with several other family members. I am aware a General Partnership is one of the worst mechanisms for seperating business and personal assets for liability/risk management purposes.
This is my understanding of things I might be wrong etc. etc. There are 2 main types of business entities (again not a lawyer and this is fictional writing) from a liability stand point:
Sole Proprietor/Partnership - The individual assets are always at risk
Corporation/LLC - The individual assets are sometimes at risk
As with all liability management "layers" is normally the strategy. There is generally no single bullet fix. Here are some ideas for how to "protect" your assets from a partnership liability. Generally, you can not transfer money after you know about a liability.
401k - Generally 100% protected
IRA - Generally some level of protection (I believe 1Million in CA currently)
529 - Depends on the state
Transmutation agreement - separate half your assets from your spouse - this only protects the half the non-partner owns.
Family partnership or other business venture that can hold money - can reduce ease of access to money in the case of a judgement
Insurance - have the partnership have a healthy amount of insurance for the types of liability you are worried about
Hope the above is helpful.
Why did they pick a partnership as the structure as opposed to a LLC or S-Corp?