No legal agreements are required to establish a general partnership. This informal arrangement may be dissolved with the same ease with which it was formed. One co-owner may dissolve the partnership. The main advantage of the partnership arrangement is the increase in resources brought to the business as additional partners enter into the operation. But with this increase in resources, comes a loss of total management control.
Partnerships have disadvantages when considering estate planning and transfer.
If a partnership is dissolved, property transfer becomes complicated. In the event of the death of a partner, the survivors are generally required to liquidate the business and distribute the assets. If a partner is planning for the business to continue after his death, an agreement with that stipulation should be drawn up. However, if additional partners are involved, they are not obligated to accept an additional general partner, especially if the added partner is a minor. A limited partnership is made up of both limited and general partners.