Limited Partnership

The limited partnership (LP) is one of the most widely used structures in private investing and family wealth organization. The general partner controls decisions and bears unlimited liability. Limited partners — often called LPs — contribute capital and share in profits but cannot participate in management without risking losing their liability protection. That clean separation of control and capital is what makes the structure so durable.

Private equity funds, real estate funds, and hedge funds are almost universally organized as limited partnerships. When a family commits capital to one of these funds, they are typically becoming a limited partner in the fund's LP structure. Separately, families commonly use limited partnerships as internal holding vehicles — a three-generation family, for example, might pool real estate assets inside an LP to centralize governance and simplify transfers between generations.

A concrete hypothetical: a founder who sold her logistics company might place liquid securities and a commercial building into a family LP, with a family-controlled LLC serving as GP. Each family branch holds LP interests proportional to their agreed ownership. This structure supports family limited partnership planning goals and feeds directly into how families think about family office structure more broadly. Readers should work with qualified attorneys to understand how LP rules apply in their jurisdiction.