We do have an extra fee associated with leaving the club. It is more of a processing fee than a penalty, and it is very small when compared with an equal equity stake in the club already.

When we are seeking out new members, we are looking for people who we don’t expect to ever want to leave the club. The club itself isn’t about money, but rather education. The intent is that you make your money on your personal investments, fueled by the knowledge gained in the group environment of the club.

Still, obviously circumstances arise where a member may want or need to make an exit from the club. We don’t seek to create artificial barriers to exit (‘penalties’), but we do have to take into account the actual cost of making our various investment assets liquid for such an occurrence (transaction fees if we sell stocks, opportunity costs for having an empty bank account, etc.)

For a more definitive answer, you’d probably need to talk to your accountant and have them look over your partnership/LLC/Inc. and tell you how it’s setup.

First of all, I just want to say that we work VERY hard to minimize member withdrawals from the club. Our policy is to seek out partners who expect to be in for the long run, and we hope that it is only in exceptional instances that one withdraws. But there are always exceptions…

As to how we handle the tax implications of a withdrawal, I’m afraid I don’t actually know the details! But I am forwarding your question on to our board who have actually handled this situation already, and I think they’ll have a quick explanation for you, James.

Thanks again for the comment!

How would the club make sure the withdrawing partner assumes the tax liability as opposed to the club (club is filed a as partnership)?