A Limited Partnership is taxed like a Partnership, yet it has many of the liability protection aspects of a Corporation. There are two types of partners in a Limited Partnership: the limited partners who invest in the Partnership but have no control, and the general partner (or partners), who controls the Partnership.
The asset protection of a Limited Partnership is held by a “charging order”. This means if a Limited Partnership is sued, a judge can issue a charging order allowing the plaintiff rights to the Partnership interest. In other words, the creditor only gets what the general partner decided to distribute, which is often nothing. This makes the Limited Partnership a very powerful asset protection tool when utilized with other business structures.
The problem with a Limited Partnership is that the general partner has personal liability for certain lawsuits filed by the limited partners against him or in a lawsuit filed against the Partnership itself.