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Family Law calendar    Apr 27, 2017

Family Law: A Case Study on Partnerships in Family Law

The law is fluid and often only changes when situations arise forcing an otherwise unanticipated outcome. This is a case study on partnerships in Family Law compiled from a number of matters our firm has handled.

The law is fluid and often only changes when situations arise forcing an otherwise unanticipated outcome. This is a case study on partnerships in Family Law compiled from a number of matters our firm has handled.

The situation: Arienne and Brad have been married for ten years. During this time, they set up a partnership for the purposes of running a successful café business. Unfortunately, now their marriage has broken down. Even more unfortunately, the partnership is in considerable debt to creditors and to the ATO.

The problem: Brad wants to leave the business behind and Arienne wants to keep the business. Seems like a win/win right? Unfortunately, a partnership is a specific legal structure which has certain complicating characteristics. Partners have unlimited liability, meaning any liability of the partnerships can be pursued against the partners directly. Moreover, partners usually have joint liability, meaning Brad could be sued for the entirety of the partnership debt if he does not exit the partnership properly!

The outcome: Arienne and Brad reached an agreement through consent orders whereby Brad’s portion of the partnership debt (being half) was accounted for in the division of assets. In return, the consent orders and other partnership documents were drafted to reflect that Brad had left the partnership. Brad avoided being sued for the entirety of the partnership debt.

The implication: Different business structures have different implications for the people involved. Partners in a partnership are both personally liable for the debts of the partnership. Moreover, they can be entirely liable for total debt of the partnership. If you and your personal partner are also in a business partnership, it will have implications for your family law property settlement.

If you have a family law matter, concerns about how to get a family law property settlement or questions about family law and separation in NSW and want to find out more please do not hesitate to contact us on 9688 6023 or email us at info@franklegal.com.au.

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This article is provided to the reader for general information. It is not legal advice. It was written by Andrea Spencer & Emily Graham and edited by James Frank.

More from the blog:

Family Law: Family Law Property Settlement

Family Law: Valuing Complex Business Structures in a Family Law Property Settlement

family law property settlement, family law and parenting, divorce, family law property settlement in NSW, case study, understanding family law

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