Business Partners, a hypothetical
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Mistress Anne
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Posted 4:48 pm, 05/31/2024
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Sure--
If they started a Company and the deceased spouse inherited 50 percent of the shares, then he or she would own half of the Company. Unless the by-laws of the Company required that there be a dividend paid for each share, the surviving spouse would not be entitled to any salary from said "Company" (unless of course, there was some contractual agreement beforehand.)
Your linked article specifically mentioned the word "Shares" and "Company" which, by plain reading means there was an incorporation filed (at least in NC other states may do it differently.) Though it might seem trivial it would be false advertising (and illegal I think, but no reference is immediately available) if we named our assumed partnership "Anti and Anne's Widget Company" without incorporating. But, we can have "Anti and Anne's Widgets" as a partnership.
And don't be fooled by the "Limited Liability Partnerships" and the like on the SOC's website, they aren't the same as a "pure 'Partnership.'" People choose to incorporate their businesses in various and sundry ways to limit liability. Corporations become legal entities which can be sued but generally shield the stockholders from liability. .In a true Partnership the partners hold all of the liability.
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antithesis
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Posted 4:34 pm, 05/31/2024
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So you're saying that Dr. Larry, in my example, could just pay himself 100% of the profits and leave Bunny with nothing?
Do you think that's fair?
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hillbilly666
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Posted 4:25 pm, 05/31/2024
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Maybe a really really really small business like a couple guys mowing yards together would operate that way but generally that's not how it's going to work for the exact reason that you laid out in your hypothetical plus a lot of other reasons. Money that comes in pays overhead and salaries and gets reinvested back into the business. You want as little profit as possible on paper
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sparkling water
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Posted 4:25 pm, 05/31/2024
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Please post pictures of the ... shoes.
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antithesis
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Posted 4:15 pm, 05/31/2024
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Do you have a source for that, Anne? The link I gave before is an attorney site, and it's specifically talking about a partnership.
That might just be semantics, though. For the sake of discussion, we can pretend that they created a corporation and both owned 50% of the shares.
I don't think that's how it works. Typically, the partners would have it set up so that they would be paying themselves out a salary for the work they do at their practice. That salary is not considered profit. This is getting out of my area of expertise, but I would imagine that a lot of small business owners just split the profits at the end of the month or something...
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Mistress Anne
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Posted 3:54 pm, 05/31/2024
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Correct me if I am wrong, but it is my understanding that "Partnerships" do not issue "shares." In the example you linked to, the court case in question involved a "Company" and not a "Partnership."
Every "Company" that operates in North Carolina must register with the Secretary of State's office and some number of "Shares" is issued. However, if Anti and Anne decide to enter into a business "Partnership" we need not register nor do we issue "shares." Ultimately, a "share" in a company can be sold by the shareholder to anyone who wishes to purchase the share then that third party becomes a part owner in the company.
In a Partnership there are no shares to issue, buy or sell. Instead, there is an agreement between Anne and Anti (whether verbal or written) and a property interest is created. Upon the death of one of the Partners the property interest conveys to the estate leading to the situations discussed earlier.
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gascon
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Posted 3:19 pm, 05/31/2024
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A contract would be good in this case, if said partners were stu%id enough not to cover their own arses then no pity.
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hillbilly666
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Posted 2:52 pm, 05/31/2024
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I don't think that's how it works. Typically, the partners would have it set up so that they would be paying themselves out a salary for the work they do at their practice. That salary is not considered profit. Profits would be what was left over after paying expenses that include salaries. So the wife's share of the profits wouldn't be split up that way.
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antithesis
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Posted 2:11 pm, 05/31/2024
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That's not my understanding, Anne...
As shareholders in a small company each shareholder may have a reasonable expectation of continuing employment and participation in management of the company. When one shareholder dies, unless an agreement among the shareholders is in place providing a right for the company or remaining shareholder to purchase the deceased shareholder's stock, that stock will be transferred to that deceased shareholder's heirs, whether by will or by intestacy. As a result, most often the deceased shareholder's stock ends up in the hands of a surviving spouse or children. https://www.lindabury.com/f...death.html
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Mistress Anne
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Posted 2:03 pm, 05/31/2024
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Since most Business Partnerships cease to exist when one of the partners dies the premise of the question is flawed.
The surviving partner could (1) enter into a new partnership with the surviving spouse, or (2) settle with the estate of the deceased partner.
Some partnerships have requirements that surviving partners purchase the deceased share of the business (thus paying the estate for the deceased partner's share) while others require that the business itself purchase the deceased part of the business again settling the estate of the deceased. Another common practice is that the deceased partner's share of the business be sold to a third party (presumably another professional in the field.)
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Anonymoose
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Posted 1:46 pm, 05/31/2024
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Anti that's the best explanation of socialism I've ever heard. Thank you 🙏
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Foxnose
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Posted 1:44 pm, 05/31/2024
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I think I see where you are going with this Anti. It is about the Bidens. Dr Jill is the only one with a PHD. although it is not in medicine but child care. She has only one patient with dementia. Some say he has been brain dead for some time but Dr. Jill still wants to cash in on him. So I guess the question you are asking is this If Joe Biden actually dies, will Hunter Biden take over the husband duties for Dr. Jill like he did for his brothers wife. Well I guess we will just have to wait and see.
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antithesis
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Posted 1:26 pm, 05/31/2024
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This is totally hypothetical, not referring to a real person! I'm curious what you all think about the law on this.
There are 2 guys, let's call them Larry and Daryl. They meet in college and become friends, and graduate in the same year with their... let's say a pHD. But that's not important to the story, it could be anything.
They decide to go into business together and start a general practice, 50/50 partners.
Business does well, they can both see about 20 patients a day. They pay themselves $100,000 a year each.
Dr. Daryl meets a woman... let's call her Bunny. She barely graduated high school, but she's very pretty and a great pair of... shoes. They get married and are relatively happy.
So now the business practice has lost a partner. Dr. Larry can still only see about 20 patients a day, but since that's half of what they were doing before the business makes half the profit. He can still pay himself $100,000 a year, though, since he's personally seeing the same number of patients.
But legally... Bunny now owns 50% of the business, inherited from her dead husband.
She can't replace Dr. Daryl and do 50% of the work, and couldn't if she wanted to! But that means that Dr. Larry now has to do 100% of the work instead of 50% like before, and he has to give $50,000 of his salary to Bunny... who sits at home flipping boogers at the ceiling all day. Forever.
Buying her out doesn't really change anything, either. With a history of a $200,000 a year profit the business would have a value of $1 million, so he'd have to borrow $500,000 to buy her out. Even if he got the loan for 25 years, his payment would be almost $55,000 a year.
What say you... is this fair?
Should Dr. Larry have to give half of his salary to Dr. Daryl's widow for the rest of his life, while she contributes nothing to the business at all?
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