Can I take money out of a business partnership bank account? It is 1/2 under my name.

Asked over 2 years ago - Cheshire, CT

my sibling has the checkbook and is keeping financial info from me. I figured if I took some cash out (not too much to risk the business) it would force him to deal with me without costly legal battle that would be detrimental to the business.
I do have access to the account online. Can the bank refuse even though I'm the 50% partner?

Attorney answers (3)

  1. Brian J Ladouceur JR

    Contributor Level 11

    6

    Lawyers agree

    Answered . A lot appears to be at issue in your questions so you may need a lawyer to sort it all out and determine how to obtain the info and results you want with the lowest legal risk.

    Entity type: In your question you refer to a 50/50 business partnership with your sibling. Most times people set up a LLC (limited liability company), however if that is not what was done then it could be a common law partnership situation. If you’ve formed an LLC and have a signed operating agreement then that agreement will establish what rights you have, what you can demand for information, and what action you can take. If no operating agreement exists then certain default rules exist in Connecticut (see Conn. Gen. St. 34-100 through 34-299). If it is instead a partnership (you and your sibling started doing business one day) then absent a partnership agreement the Uniform Partnership Act provisions will apply (see Conn. Gen. St. 34-300 through 34-405).

    Records: Generally speaking whether you have a LLC or a partnership certain records must be maintained by the entity (or partnership) and that each of its members (or partners) has a right to inspect and copy those records (LLC-Conn. Gen. St 34-144) (Partnership-Conn. Gen. St. 34-337). If a fellow member / partner refuses to provide such information, especially if a written demand is made, then unless the operating agreement or partner agreement provides for arbitration of disputes, an application (suit) to the Court would need to be made to force the disclosure of such information.

    Bank Account: Generally it is ill advised for one member (partner) (without permission of the others) to unilaterally withdraw funds from a LLC (partnership) account. In addition to exposing that person to possible claims for breaching a fiduciary duty, it might also be considered a distribution of LLC (partnership) assets subject to taxes.

    If the account is in the LLC’s name (and multiple partners are listed as authorized on the account) one possible option is to leave the funds in the account and make a written request to the bank to “freeze the account” (i.e. state that you as a co signatory on the account do not consent to any transfers until further notice). If two signatures are needed then that might effectively get your siblings attention, without removing the actual funds. The same could be done if a partnership account and both partners names are on the account and necessary to authorize transactions.

    Loan: A review of the loan documents is needed to figure out what may or may not happen, however, generally, as long as the LLC (partnership) is still viable (not dissolved, bankrupt, etc.) and the loan payments are timely made, then unless some other incidence of default has occurred, the loan should still be in place.

    If your sibling doesn’t think you’ll act then that could be a self fulfilling prophesy if you are not willing to make intelligent demands for the information that you are entitled to, and take appropriate action if it is still not voluntarily provided. Speaking with a lawyer may help in directing you to a reasonable and effective course of action, and (if needed) demonstrating you are serious about your demands.

    Good luck.

    If you've found my answer helpful and informative please give me a "thumbs up" below.

    Disclaimer: The foregoing answer does not constitute legal advice, is provided for informational and educational purposes only for persons interested in the subject matter. Each situation is fact specific and may be subject to state specific laws. Without a comprehensive consultation and review of all the facts and documents at issue it is impossible to evaluate a legal problem fully. This answer does not create an attorney-client relationship.

  2. Bryant Keith Martin

    Contributor Level 18

    5

    Lawyers agree

    Answered . Depends on how the account was set up at the bank: If you are listed as a signatory, you can cash the check. If not, not, regardless of the fact that you are a partner. Most banks do not like to look into the legalities behind their account docs. As a matter of ptsh law, you are entitled to see all the books and records of the ptsh and his withholding them is a violation of his fiduciary duty (the highest) to you under state law. Similarly, you are not entitled to withdraw funds for nonpartnership purposes. If you do, you are just making his case against you when it eventually leads to a legal battle. You should first consult a business litigator about what to do, even though you may have to pay for the consultation.

    DISCLAIMER—This answer is for informational purposes only under the AVVO system, its terms and conditions. It is... more
  3. Michael Charles Doland

    Contributor Level 20

    3

    Lawyers agree

    Answered . Your "solution" is not calculated to solve the problem (non-disclosure of financial information due to a partner) and is likely to make communications worse not better. As my colleague indicates, if you take funds not for business purposes you may make things much, much worse.
    Consult an attorney to get you your rights regarding information.

    The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may... more

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