Estate Planning Choice of Wealth Management Entity: The Limited Partnership as an Alternative to the Trust

Abstract

INTRODUCTION|This Article takes a closer look at the limited partnership as an alternative to the trust. After summarizing the shift in client perspective and objectives in part two, this Article analyzes specific characteristics of the limited partnership important to achieving those goals in comparison to the trust; in part three, it reveals the general partner, much like a trustee, can provide management of partnership assets and determine the timing and appropriateness of distributions to interest holders. The limited partnership, further, can provide some protection of assets from the immediate reach of a limited partner’s creditors. It also can minimize income tax burdens when compared to a trust. The limited partnership can meet these client preferences and, at the same time, avoid certain downsides of trusts, such as more stringent investment duties and hurdles faced in trust modification. The analysis reveals that the characteristics of the limited partnership, as compared to a trust, make it a viable choice for affluent clients.