If you have heard and generally know what a limited liability company is; then, you would know that substantially a limited partnership is the same.  The difference in these two types of companies or businesses lies on the people behind them.  A limited liability partnership is typically set up for the practice of a certain profession.  So, you would, generally, find a group of doctors, lawyers, engineers, and architects forming this kind of partnership.  This form is generally preferred because this allows limits and restrictions on the claims or suits that would be filed against you since the partners in this form of partnership are not generally liable for the obligations arising from negligence, willful misconduct or acts, or malpractices of another partner.  Their obligations would be merely limited to the debts and obligations contracted by the partnership in its operations.

Partners would usually be bound by their partnership agreements regarding this matter.  They could even expand their duties or liabilities as between them.  This is especially allowed if the limited liability partnership is set up offshore.  It is, in fact, even better to set up a partnership offshore, especially in Cayman Islands.  Aside from the typical advantages of a limited liability partnership, Cayman Islands asset protection laws are applicable to limited liability partnerships as well.  So, if a partner would be sued for a malpractice or misconduct, his and the partnership assets would be safe in an offshore jurisdiction.  The claims would be merely limited to the properties inland.

The islands’ courts do not recognize foreign courts judgments.  Another benefit of setting up an asset protection trust through a limited liability partnership is that the income of the partnership would be free from tax.  As long as these are all clearly understood and drafted in a partnership agreement, you would be greatly benefited by an offshore asset-protecting trust.