Texas law says that an association of two or more persons to carry on a business for profit as owners creates a partnership, regardless of whether the persons intend to create a partnership. Sure, it is easy to create a partnership, but how will you know what the terms of the agreement are?
One of the biggest problem that develops when partners fail to write down the terms of their partnership is what happens when one of the partners gets divorced. Let us assume that each partner owns 50% of the business partnership. If a partner is married when the partnership is formed, it is presumed that the 50% owned by the married partner is marital community property subject to division in a divorce. The solution to the divorce of a partner is to have Marquardt Law Firm, a Texas Business Law Firm and a New Mexico Business Law Firm, draft a partnership agreement and a buy-sell agreement that spells out exactly what happens when a partner gets divorced. The agreement would say that if a partner gets divorced the partnership interest of the partner involved in the divorce is for sale, and the first person with an option to purchase is the other partner. This ensures that your partner’s ex-wife doesn’t become your partner.
Another big problem that occurs in general partnerships is the death of a partner. The 50% interest of a partner is an asset that a partner can give, bequest, or devise to a beneficiary in his last will and testament; or if the partner fails to execute a last will and testament, the 50% interest is an asset that can be inherited subject to the intestacy laws of the state of the partner’s domicile (residence/homestead). What happens if your partner dies, and your partner’s last will and testament says that his grandchildren inherit everything he owns? Answer: your partner’s grandchildren become your partners in business. The solution to the death of a partner is to have Marquardt Law Firm, a Texas Business Law Firm and a New Mexico Business Law Firm, draft a partnership agreement and a buy-sell agreement that spells out exactly what happens when a partner dies. The agreement would say that if a partner dies the partnership interest of the deceased partner is for sale, and the first person with an option to purchase is the other partner. This ensures that your partner’s grandchildren do not become your partners.
