Partnership Planning
In the legal field, partnerships are thought of as a “business marriage.” The name is accurate – a partnership is simply two or more people who agree to do business together and who split costs and profits. That also means your business partner can max out a credit card and you could be stuck with the bill.
Forming a partnership the right way is critical to the partnership’s success while you’re active and after you’ve left. If your partner gets divorced, are you comfortable being in business with their ex-spouse?
That’s not to say partnerships are never a good idea. Sometimes you may not need a formal entity like an LLC, or you’ve already got other liability protection strategies in place. There are also some types of partnership that have massive tax benefits for estates over $3.5 million.
Your next step is to speak with an experienced business planning lawyer at Hunter Sargent, PLLC today to find out about your options in partnership planning.
Partnership Disputes
It’s common for partnerships to end on bad terms because of the trust you’re putting into a business partner. The reality is most people will look out for themselves first, even if that means leaving you and the partnership behind.
Careful partnership planning can mitigate a partnership dispute by including mandatory buyout/payout provisions that can’t be waived by just one partner.
If your partnership agreement doesn’t have buyout/payout provisions – or worse, you have no partnership agreement at all – you and your loved ones may lose everything you worked to build.
Make sure you have what you need to protect your legacy and your partnership – speak with a business planning lawyer at Hunter Sargent, PLLC today.
The First Step: The Partnership Agreement
If you form a partnership, the best way to protect yourself and your legacy is with a partnership agreement. The partnership agreement is a roadmap for how the partnership will be operated, including who will be responsible for making business decisions, how profit and loss will be allocated, and what happens to your partnership if your partner dies or gets sued.
It will also be “Exhibit A” in a partnership lawsuit, so you simply must get the agreement right the first time.
