Legal Question in Business Law in New York

Re: Dissolving a Partnership

You, as an accountant, probably know that New York law provides that commonlaw partnership is broken as easily as it is made: the sisters would have to merely stop holding themselves out as partners, and would have to notify current and potential clients of the breakup of the partnership.

However, you indicate that there is an agreement in place between the sisters. This complicates things, since such agreements can and often do override the default provisions of law. Without knowing the provisions for dissolution and winding-up that may be present in the agreement, it's not possible to discern the "best" way to handle the situation.

The best advice you could give your clients is to take the written partnership agreement to a business lawyer and ask him/her for advice on dissolution and winding up based on that agreement.

If there is no WRITTEN agreement in place, then the New York default rules apply (even if the sisters think they have a different agreement).

I would want the surviving partner to form a business entity with a bit more backbone than just a sole proprietorship. Teaching yoga can get students literally into knots, and knotted-up people tend to be unhappy and therefore litigious. This could lead to way too much personal liability. I'd have the surviving partner form at least an LLC to limit personal liability.

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.