Can the limited partnership also protect against divorce?

Yes. A correctly structured LP can provide some protection against divorce. For instance, the LP agreement may provide that if divorce forces an involuntary transfer of an LP interest to the spouse, the other partners may have first option to buy the LP interest for an amount less than the underlying value of the LP assets. But you must carefully draft LP agreements for this purpose. Also, if one spouse is the sole general partner before the divorce, and owns 50 percent of the LP after the divorce, then the other spouse cannot remove that spouse as the general partner. Thus, the general partner spouse would continue to control the LP assets, notwithstanding that the LP is equally owned with the ex-spouse.

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