First... this is why I am asking... I do not have other funds in any of my accounts at this time. Hence, this tread. I know there are some problems with doing this, hence, this thread. ---------------------------------------------------------------------------------- Now on to important stuff: Some more information for those who have experience with this. It will only be one, maybe two people (probably one). The funds will be about 300,000-400,000 (close family member(s)). I am NOT interested in ANY other funds (unless this person wants to add to it). I am not trying to cut corners (it seems that some of you have assumed that I am looking for an easy way out, but I am not). It looks like an LLC is the best option so far, but if it is just a single person wouldn't a joint account acceptable (I am not concerned about money "haggling" problems with this person, or the possible second person)? Thank you all for you responses. Fell free to elaborate at will.
Ray. The LLC will work, but as I suggested earlier, the problems will occur when the members remove/liquidate funds and/or otherwise dissolve the 'thing', whatever ultimately it ends up being. Some very good posts have identified the possible complications if you have an individuals name on the account and co-mingle the funds. A specific set of instructions must be identified on how members 'pull out', either voluntarily or involuntarily and who has control. For the LLC, this is defined in either the Aricles of Organization or the Operating Agreement. For example, what happens when you have funded this thing, and you the General Manager, on the way to the broker to make your first trade, gets run over by a bus? Who takes over? After what process? What happens to Uncle Jim? Does he walk in and show some paperwork and cash out yours and his too? Will your heirs be comfortable with that? What if you and Uncle Jim got run over by the bus at the same time? What if Uncle Jim wants to pull out after you have loaded up the LLC with index futures that have drawn down 50%, but you are convinced they will go back up and be profitable? Maybe Uncle Jim files a lawsuit against the LLC and gets a court order to freeze the accounts (injunction) until it can go to trial, and in the meantime the market moves away from you and you can't stop it? What if you deceide that it's not working with Uncle Jim (and the LLC has underperformed) and you want out and offer to buy out Uncle Jim, but he wants the price based upon what was put in, plus some? Not to rain on the party, but almost all business endeavors between 'folks' end up in tatters, with friends parting company with experience, always less money and the unfortunate opportunity to meet some new attorney types. Bottom Line: Be very careful here. Don't worry so much how the profits will be split. Worry most about the break up. Plan for the divorce going in - the ultimate stop-loss. After you have that laid out, everybody agrees, committed to a legal document (blessed by an attorney), then everything else will be easy. If you still want to go ahead after all that, it will probably defy the odds and will hold thru good times and bad. Good Luck.
RAY-If only one other person and you are not charging mgmt fee just open one of two types. 1)single name with you having limited trading authorization 2)joint account : RAY and Mr Bucks joint tennents with rights of survivorship. easiest/cleanest methods