Another layer of protection in an EQUITY PARTNERSHIP?

[Jessie Dillon]

FOOD FOR THOUGHT FOR ANYONE CONSIDERING GETTING INTO A PARTNERSHIP THIS YEAR: 

partnerships can be scary! unless you have an attorney involved that you know and trust, who has tons of experience with real estate / business transactions, you may worry that your best interest is not being protected, and "you don't know what you don't know!"

a pro tip that i've gathered is to look into term life insurance policies for each partner. here's why:

partner #1 gets a term life policy with partner #2 listed as sole beneficiary, vice versa. they determine term length & value based on about how long they plan to hold the property, and about how much equity each of them will have in the deal at that time. 

partner #1 passes unexpectedly. rather than partner #2 having to default to going into business with #1s family, it's written into their partnership agreement / trust docs that in this situation, #2 has the option to buy out #1s interest in the deal. #2 uses the proceeds from #1s life insurance policy, to buy out their half, and #2 is now sole owner of the property.

these are the things that no one wants to talk about, but discussing all possible 'worst case scenarios' up front with a potential partner can help you avoid some sticky situations. it also provides all parties with peace of mind, which allows for way better business decisions to be made.

this is not legal or financial advice; this is a suggestion to talk with your insurance broker and see if this would suit your partnership's needs. 

and remember: partnerships can take any form! work with your attorney to figure out creative ways to meet everyone's needs. i've learned this year that real estate truly does have to become a team sport for every investor, at a certain point, if they want to do bigger and better things. BPCON 2022 was what opened my eyes to that, and it's been PIVOTAL for me this year, so i'm eager to see what big takeaway i'll get from BPCON 2023! 

if you're interested to learn more about my personal partnerships or talk shop, i can be found on IG at @jessiedillon_. i share tons about my journey on there and love connecting with other investors!