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

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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

Answers:

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

Answered 10 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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