Limited Liability Partnership
There are many different ways to form a business under Minnesota Law and one of them is a Limited Liability Partnership. A Limited Liability Partnership is basically a general partnership that has registered to be a Limited Liability Partnership and has also filed a “statement of qualification.” Minnesota Statute § 323A.1001. Unlike a General Partnership, which can be formed without any deliberate action by the partners, the Limited Liability Partnership is created by statute. Further, partners of a Limited Liability Partnership are given protection from any creditors once the statement of qualification has been filed and is in effect with the Minnesota Secretary of State. Minn. Stat. § 323A.1001. In addition to the original statement of qualification, the Limited Liability Partnership must annually file to continue to be protected from the partnership’s liabilities. Minn. Stat. § 323A.1003.
A Limited Partnership must have at least one or possibly more general partners and at least one and possibly more limited partners. Minn. Stat. § 321.0102(11). In 2001, Minnesota adopted the Uniform Limited Partnership Act. The Uniform Limited Partnership Act requires that a Limited Partnership file a certificate of Limited Partnership with the Minnesota Secretary of State. Minn. Stat. § 321.0201. A Limited Partnership differs from other partnerships because a general partner of a Limited Partnership is personally responsible for the debts of the Limited Partnership. Minn. Stat. § 321.0404. Because of this exposure of the general partner, usually the formation includes that the general partner is a corporation or some sort of Limited Liability Company in order to avoid any personal obligation of any one individual. Any other partner that is not a general partner and therefore a limited partner is liable for the obligations of the partnership only to the extent of that limited partner’s contribution to the partnership. However, a limited partner can also be a general partner. If that’s the case then that partner is personally liable for the debts and obligations of the Limited Partnership because of their general partner status. All of the day to day management of the Limited Partnership is vested with the general partner. Usually limited partners have little to no involvement in the day to day operations. Minn. Stat. §§ 321.0302, 321.0305.
Family Limited Partnerships
If a Limited Partnership is owned by primarily family members, then it is a Family Limited Partnership. Family Limited Partnerships are usually used for estate planning purposes. An older generation of a family acts as the General Partnership and controls the Family Limited Partnership, and in addition, makes gifts of the partnership interest to members of the younger generation. This is beneficial because interests transferred from the Family Limited Partnership can be excluded from the transferor’s estate for tax purposes.
Limited Liability Limited Partnerships
A Limited Liability Limited Partnership is a Limited Partnership that is registered as such with the Minnesota Secretary of State. Minn. Stat. § 323A.1001. The general partner in Limited Liability Limited Partnership has similar personal liability protection as a Limited Partnership partner would in a Limited Partnership.