A creditor gets a charging lien against distributions from a limited partnership to the debtor limited partner. The partnership makes little or no distributions during the debtor’s lifetime. The debtor dies leaving his partnership interest to his children. What happens to the charging lien?
The question turns on whether the charging lien is imposed on the property, the partnership interest, or whether it is against the debtor who is the recipient of money distributions from the property. If the charging lien is against the interest then it should be treated like any other property lien, such as a mortgage, and survive the debtor’s death. The lien would give the creditor the right to partnership distributions after the debtor died and the partnership interest was assigned to the children. If the lien is against the debtor, then the lien would not apply to partnership distributions after the debtor died.