How to Make Your Spouse a Legal Business Partner in Property

By David Carnes

It is possible to add your spouse as a legal business partner -- in fact, this happens automatically under state law as soon as you agree with your spouse to do business together and to share profits and losses, even if your agreement is only verbal. You must, however, actually be doing business -- merely owning property as husband and wife is not enough to form a legal partnership, although it may confer joint ownership. Although you do not have to execute a written partnership agreement, a partnership agreement is critical to avoiding disputes.

It is possible to add your spouse as a legal business partner -- in fact, this happens automatically under state law as soon as you agree with your spouse to do business together and to share profits and losses, even if your agreement is only verbal. You must, however, actually be doing business -- merely owning property as husband and wife is not enough to form a legal partnership, although it may confer joint ownership. Although you do not have to execute a written partnership agreement, a partnership agreement is critical to avoiding disputes.

Step 1

Select a legal name for your partnership and perform a name availability search using the search function on the website of your state's Secretary of State. Some states require the legal name of a partnership to be the last names of the partners -- for example, "Cramer & Cramer."

Protect your loved ones by a legally binding will. Make a Will Online Now

Step 2

Select a fictitious business name, perform a name availability search and register your fictitious name, if you wish your partnership to be known under a name other than your last names. Many states require you to notify the state government of your fictitious business name, and others allow you to register a fictitious business name even though it is not mandatory. Registration will prevent another in-state business from using your name.

Step 3

Draft a partnership agreement in duplicate, sign both copies and have your spouse sign them. You don't have to file your partnership agreement with any state or federal agency. The partnership agreement should cover your respective capital contributions to the partnership, profit and loss sharing, voting rights, management rights and responsibilities, entry and exit of partners and dispute resolution procedures. Because a two-person partnership faces a tie vote every time the partners disagree, a comprehensive partnership agreement is the most effective way to resolve disagreements.

Step 4

Amend any title documents representing property that you want the partnership to own so that it lists the legal name of the partnership as the owner. If the partnership will own real estate, for example, have the county land recorder's office reissue the title deed. Use a quitclaim deed to relieve the previous owner of potential liability in case of unrecorded mortgages or competing claims to title.

Step 5

Register as a limited partnership with your state government, if you want one partner to enjoy limited liability for partnership debts. To register you must complete a short registration form and pay the state filing fee. The registration form asks for the name and address of the partnership, the name and address of a legal representative, and the name and address of the general partner. Designate either yourself or your spouse as the limited partner in the registration form. The limited partner may not take an active role in operating the business.

Step 6

Apply for any business licenses necessary to do business in your state or locality. A real estate partnership, for example, may require state licensing of the partnership itself, even if the partners are already licensed realtors.

Protect your loved ones by a legally binding will. Make a Will Online Now
How to Change Ownership From a Proprietorship to a Partnership

References

Resources

Related articles

Comparison: LP and LLP

When forming a new business, it is important to select an appropriate business structure. You may consider a number of factors, such as the length of the business venture, the nature of the business and the level of involvement by the investors. Partnerships are a common option because they are relatively simple to set up and allow for a variety of management structures. A partnership may be formed as a general partnership, limited partnership or limited liability partnership.

Arkansas Limited Partnership Act

A limited partnership is a type of partnership in which partners enjoy the same limited liability as corporate shareholders. Arkansas limited partnership law is based on the Revised Uniform Limited Partnership Act, a model law that has been enacted by many states in an attempt to harmonize state partnership law throughout the United States.

Going From a Partnership to a Sole Proprietorship

A sole proprietorship is a form of business that involves one person. All decisions, operations and management powers rest with a single party. A general partnership involves two or more parties operating as a business. Certain kinds of partnerships, like limited liability partnerships, must formally register in the state where they do business.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Importance of Partnership Agreement

A legal partnership is formed automatically whenever two or more parties -- either individuals or organizations -- ...

How to Convert a Sole Proprietorship to a Partnership in Maryland

In many cases, a business gets off the ground with the work of a single owner operating a sole proprietorship. As the ...

Dissolving Legal Partnerships

A general partnership is automatically formed under state law whenever two or more persons or business entities agree ...

How to Fill Out DBA Forms

DBA is short for "doing business as." Sole proprietors and even larger companies may elect to operate under ...

Browse by category