Re: Financial structure advice needed for forming group
From: Michael Barrett (mbarretttoast.net)
Date: Tue, 21 Nov 2006 09:12:58 -0800 (PST)
Tom Hammer asked:
Could you please inform us how you structure(d) your
membership and membership contribution? Please let us
know what worked and what you would have done
differently. Thank you.

My only contribution to this thread will be to encourage Tom and his group to keep a hard nosed attitude to this task, try to think of as many contingencies as they can, write it all down very explicitly and get people to sign up to the agreements. Regrettably my community has suffered substantial long drawn out emotional and financial pain and grief due to loosy-goosy warm huggy agreements. What was written down (before my joining the group) has since been deemed essentially worthless by an attorney and most of the potentially contentious stuff was omitted anyway - I suspect because "we love and trust each other so we don't need to worry about it!" Assuming that you will always be able to "work something out" is, my opinion, a very bad idea.

So my recommendation is to persist in trying to define firm responses to all cases - specifically addressing the "difficult" cases - what happens when folks drop out for good reasons and bad, when employment is lost or a business fails, when folks (or relatives of folks) die, when families break up, when the estranged spouse reappears and disagrees, when illness occurs, and, last but not least, when the whole project takes far, far, far longer than you ever thought possible - such that kids grow up, aging parents get to need care, etc., i.e. all the events of life occur. While kindness and charity will hopefully find acceptable solutions, having an explicit, unambiguous default response to "difficult" events, on paper, from square one, can make for clarity, and hopefully avoid destructive disagreements.

The frank discussion and setting down of default responses to difficult situations can give idealistic dreamers something to think about, and hopefully deter later arguements. And while I have no enthusiasm for attorneys, having an attorney look over your "agreements" is almost certainly necessary if you want your agreements to be enforceable.

Best wishes and good luck.
MB


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