A partnership is formed when two or more persons act together in a business venture with the intention of making a profit. A partnership can also be a Limited Partnership or a Family Limited Partnership.

A partnership is very poor asset protection. Why? Because each partner in the partnership is equally and severally liable for the debts of the partnership. If you are a partner in a General Partnership, you can be held 100 per cent liable for all the debts of the partnership even though you may not have incurred them personally.

This is the very worst way to structure a business venture or operate a business as a going concern. All of the benefits of a general partnership are far outweighed by the potential total loss of your personal assets.

It is the worst asset protection structure as your personal assets are vulnerable to a frivolous lawsuit. With lawsuits being filed at the rate of 100 million cases a year, no asset protection strategy involving a partnership would be considered prudent asset protection. 

Feature of the Partnership

• No Asset Protection
• All partners are liable for the debts of the partnership 
• The assets of the partnership are owned by the partnership not individually
• Profits are shared on a predetermined basis
• Losses are shared by the partners individually
• Income of the partnership is taxed in the hands of the individual partners