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ARTICLE · 30 JULY 2024

Partnership Pitfalls – Death Of A Partner

Stephens Scown
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Upon a partner's death, a partnership without an agreement is dissolved, requiring immediate winding up, asset liquidation, and debt settlement. The deceased's estate can claim a share of post-death profits or interest on their share's value. Liability for prior debts continues posthumously. To prevent disruption, a well-drafted Partnership Agreement is crucial for business continuity and financial stability.

United KingdomFinance and Banking
Toby Claridge
Toby Claridge
Helen Prince
Helen Prince

What happens upon the death of a partner? These are the legalities you need to consider for your business to continue.

What is a partnership?

A partnership is a relationship which exists between two or more persons carrying on business together with a view to make a profit. Partnerships are governed by the Partnership Act 1890 ("the Act"). A partnership is not a separate legal entity and the partners generally have unlimited liability.

If a partnership has no written partnership agreement, then the provisions of the Act shall apply.

Death of a partner

Where there is no partnership agreement, section 33(1) of the Act applies and states that every partnership is dissolved by the death of any partner.

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