allowing Family trusts to be partners

Janice Scholler on

Our club is considering allowing Family Trusts to become
partners. The limitation to trusts that the partner is the
sole grantor and trustee eliminates most of our members.
What if we allow any revocable living trust, and add to the
removal of a partner paragraph that changes in trustees, or
disputes between trustees are grounds to remove the trust as
a partner?

Below are the proposed paragraph changes.

18. Transfers to a Trust. A partner may, after giving
written notice to the other partners, transfer his interest
in the partnership to a revocable living trust of which he
is the grantor and trustee.

19. Removal of a Partner. Any partner may be removed by
agreement of the partners whose capital accounts total a
majority of the value of all partners' capital accounts.
Conditions for consideration of removal may include but are
not limited to, failure to meet attendance requirements
(specified in Operating Procedures), failure to make
required regular contributions (specified in Operating
Procedures) and unauthorized activity undertaken by a
partner in the name of the partnership (Paragraph 24),
dispute between Trustees and the club, or change of Trustee
for a Trust.
Written or email notice of a meeting where removal of a
partner is to be considered shall include a specific
reference to this matter. Following a vote to remove, the
removal shall become effective upon payment of the value of
the removed partner's capital account. This shall be done in
accordance with the provisions on full withdrawal of a
partner(Paragraphs 21 and 22). The vote action shall be
treated as the receipt of request for withdrawal.

ira smilovitz on

The only simple answer is to consult with a local attorney to determine what the potential consequences are.

Ira Smilovitz

On Fri, Dec 11, 2015 at 10:52 PM, Janice Scholler <scholler.janice@gmail.com> wrote:

Our club is considering allowing Family Trusts to become
partners. The limitation to trusts that the partner is the
sole grantor and trustee eliminates most of our members.
What if we allow any revocable living trust, and add to the
removal of a partner paragraph that changes in trustees, or
disputes between trustees are grounds to remove the trust as
a partner?

Below are the proposed paragraph changes.

18. Transfers to a Trust. A partner may, after giving
written notice to the other partners, transfer his interest
in the partnership to a revocable living trust of which he
is the grantor and trustee.

19. Removal of a Partner. Any partner may be removed by
agreement of the partners whose capital accounts total a
majority of the value of all partners' capital accounts.
Conditions for consideration of removal may include but are
not limited to, failure to meet attendance requirements
(specified in Operating Procedures), failure to make
required regular contributions (specified in Operating
Procedures) and unauthorized activity undertaken by a
partner in the name of the partnership (Paragraph 24),
dispute between Trustees and the club, or change of Trustee
for a Trust.
Written or email notice of a meeting where removal of a
partner is to be considered shall include a specific
reference to this matter. Following a vote to remove, the
removal shall become effective upon payment of the value of
the removed partner's capital account. This shall be done in
accordance with the provisions on full withdrawal of a
partner(Paragraphs 21 and 22). The vote action shall be
treated as the receipt of request for withdrawal.

Robert Mann on

We did not consult with an attorney so my advice is suspect. We changed our by-laws to allow a partner to move their funds into a trust but noted that it is the person who is a partner in the club, representing the trust, and not the trust. All rules governing individuals still apply, including distributions upon the death of the partner.

On December 11, 2015 at 10:52 PM Janice Scholler <scholler.janice@gmail.com> wrote:

Our club is considering allowing Family Trusts to become
partners. The limitation to trusts that the partner is the
sole grantor and trustee eliminates most of our members.
What if we allow any revocable living trust, and add to the
removal of a partner paragraph that changes in trustees, or
disputes between trustees are grounds to remove the trust as
a partner?

Below are the proposed paragraph changes.

18. Transfers to a Trust. A partner may, after giving
written notice to the other partners, transfer his interest
in the partnership to a revocable living trust of which he
is the grantor and trustee.

19. Removal of a Partner. Any partner may be removed by
agreement of the partners whose capital accounts total a
majority of the value of all partners' capital accounts.
Conditions for consideration of removal may include but are
not limited to, failure to meet attendance requirements
(specified in Operating Procedures), failure to make
required regular contributions (specified in Operating
Procedures) and unauthorized activity undertaken by a
partner in the name of the partnership (Paragraph 24),
dispute between Trustees and the club, or change of Trustee
for a Trust.
Written or email notice of a meeting where removal of a
partner is to be considered shall include a specific
reference to this matter. Following a vote to remove, the
removal shall become effective upon payment of the value of
the removed partner's capital account. This shall be done in
accordance with the provisions on full withdrawal of a
partner(Paragraphs 21 and 22). The vote action shall be
treated as the receipt of request for withdrawal.

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