Partnership Agreement and Wills

Partnership Agreement and Wills: A Guide for Business Owners

As a business owner, you understand the importance of planning for the future. You have undoubtedly put time, money, and energy into building your company, and you want to protect that investment. One crucial aspect of this protection is ensuring that your partnership agreement and will are both in order.

Partnership agreements are legal contracts that outline the terms of a business partnership. They are crucial for ensuring that all partners are on the same page regarding their roles, responsibilities, and expectations. A well-written partnership agreement can prevent misunderstandings and disputes, which can save the partnership time and money down the road.

When drafting a partnership agreement, there are several key provisions that you should include. These include:

– The names of each partner and their ownership percentage

– The responsibilities and duties of each partner

– The decision-making process for key business decisions

– The procedure for admitting new partners or buying out existing ones

– The process for resolving disputes or dissolving the partnership

– The provisions for succession planning in the event of a partner`s death or disability

One common mistake that business owners make is assuming that their partnership agreement is sufficient in the event of their death. However, a partnership agreement cannot address what happens to a partner`s share of the business after their death. That is where a will comes in.

A will is a legal document that outlines your wishes for how your assets will be distributed after your death. If you are a business owner, your will should include provisions for your business interests. Specifically, you should outline what happens to your share of the business if you die.

There are several ways to handle this. One is to provide for your share of the business to pass to your business partner(s) in the event of your death. Alternatively, you could designate your share of the business to pass to a family member or other beneficiary. However, keep in mind that if you choose this option, your business partner(s) may not be thrilled with the idea of having an outsider become a partner in the business.

Another option is to designate a buy-sell agreement in your will. A buy-sell agreement is a legal document that outlines how the business will be valued and how a partner`s interest will be purchased if they die or become disabled. This can be a good option if you and your partner(s) want to maintain control over who owns the business.

In any case, it is essential to work with an attorney experienced in business law and estate planning to ensure that your partnership agreement and will are both valid and effective. Doing so can provide you with peace of mind and protect your business for years to come.