International LLC's With Family Limited Partnerships

A remote possibility exists that if a general partner becomes a judgment debtor (or manages a domestic LLC that is the general partner of a partnership), then under certain circumstances a judge may order the manager to distribute a portion of the partnership's assets to satisfy the judgment. As unlikely as it is that this could occur, we have pointed out several court cases in which a creditor was granted perfection of their charging order rights, suggesting that in isolated cases the charging order can be enforced against a limited partnership.

While it is possible to substitute a general partner and select an international individual (in advance of a claim or action), the general partner may still remain within the control of the United States courts. For this reason, an individual seeking the most secure Asset Protection may wish to place management of a partnership outside of a U.S. courts' jurisdiction by forming an international LLC to serve as the general partner of the LP. This strategy would permit an onshore person to manage the LLC until a creditor threat arises, at which point the LLC's manager would be replaced with an international LLC. After the threat has passed, the members of the international LLC could vote to once replace the international manager with one that is domestic.

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