Beneficiary Forms

We do not recommend that clubs have beneficiary forms because, depending on state laws, they may not be a valid way to distribute a partnership interest in the event of a death. If your club distributes assets incorrectly, you may end up in the middle of a dispute with the heirs to the estate.

For example, if a club mistakenly pays out a deceased members share on the basis of a beneficiary agreement that does not agree with the deceased member's will, the club could be on the hook for paying the legitimate beneficiary the full amount of the payout.

Since you are a general partnership, in a dispute over an estate payout, each member is fully liable for the complete amount. Anyone going after the club for correct payment could try and collect from any member they feel they'd be most likely to be able to recover the money from.

Instead, each member should make allowance in their personal estate plans for how they want their club partnership interest distributed to their heirs and the club should stay out of it.

If a member passes away, the club should just distribute their portion of the club to their estate. That way the estate is responsible for distributing it to the correct people and the club stays out of any problems with the member's heirs.