Doctors & Dentists - Why Partnership Agreements are a vital tool of the trade?
Posted February 8th, 2010
When setting up a new partnership (like any business) there are a million and one things to be sorted out before you start. A partnership agreement is often over looked but regrettably can often be needed in many instances.
A well drawn up agreement will deal with:
• How the business will be run
• Entry or exit of new partners
• Death
• Succession
• Retirement
• Valuations - property etc
• Disputes
• Other earnings
• Divorce
A recent discussion with a GP client of mine revealed that the lack of such an agreement has enabled a previous partner of his to continue to enjoy the rent & value increases of the business premises which he vacated over 15 years ago!
In the event of the death of a partner, the beneficiaries of the estate will usually be their family. They may have no experience of running a business and are unlikely to be able to contribute to it in any way. In these circumstances they will usually wish to withdraw their share of the capital at the earliest opportunity. Having partnership protection in place ensures that the family can receive a fair value for that interest.
From the surviving partners’ point of view, they will be continuing to run the business with a sleeping partner taking a share of the profits. They will be keen to ensure that they will be in a position to regain control of the business by paying the family their share of the business back as soon as possible. Partnership protection ensures they have sufficient funds to do so.
For further information on partnership agreements and protection, please contact me on 01204 663904 or advice@themedicalifa.co.uk