What Role Does the Limited Liability Partnership Play?
Unlike a general partnership, a limited liability partnership,otherwise known as a LLP, can help put a sense of financial security in the minds of its partners. Here is some beneficial information about the role of a limited liability partnership.
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Features
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The right partnership can pay off. Limited liability partnerships serve to provide all partners with limited personal liability when a problem occurs. When a problem involving one of the partners occurs, none of the other partners in the LLP are subjected to personal liability.
History
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Limited liability partnerships started sprouting up in the early 1990s; in 1992, only two states had adopted LLP statutes, but 42 states had decided to follow suit by 1996, when LLPs were added to the Uniform Partnership Act.
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Benefits
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Debt is a mounting concern. A LLP protects partners from the liabilities of a partner who has performed malpractice, become negligent or otherwise conducted himself poorly. This business structure can help save innocent partners from debt.
Considerations
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State law sometimes supercedes some LLP protections. Often times, professionals such as lawyers and accountants form a LLP to protect themselves from the liabilities incurred by other firm partners' malpractice, misconduct or negligence claims, which are common in these professions.
Warning
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A LLP can only protect its partners as far as state regulations allow. For example, many states do not extend protection beyond TORT claims, nor will the states give protection to partners who may have supervised the delinquent partner's acts.
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