What to do if my business partner wants to list his son instead of himself on our partnership papersin order to collect disability?

UPDATED: Jan 14, 2011

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What to do if my business partner wants to list his son instead of himself on our partnership papersin order to collect disability?

I am in the process of purchasing an existing business and will be setting up a partnership agreement. However, the partner does not want to appear on the legal documents as 50% owner so that he can collect disability. Can I protect myself by having a clause inserted into the partnership agreement stating that if his son does not perform his legal, financial, and day-to-day duties for the business, that this partnership responsibility will then default to the father  the guy collecting disability)?

Asked on January 14, 2011 under Business Law, New York


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I caution you here to be drawing up a partnership agreement  - especially in light of the situation with your potential partner - on your own.  You have way to much at risk of losing to be doing this by yourself.  Does he want to be a "silent partner" meaning he would have no say in making decisions?  No, he does not.  And are you going to pay his proceeds from the partnership - his draw - through his son too?  Then you would be committing and helping to perpetrate a fraud in many ways.  This is not a good situation and you need to protect yourself.  Seek legal counsel as soon as you can.  Good luck.

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