W died intestate a few weeks ago leaving spouse H and 3 children (one of which not seen foe 20 years). H & W partners in a business (agricultural machinery manufacturer). No partnership agreement in place.
What happens with the business partnership? Does it dissolve, or pass by survivorship to spouse so he is sole trader, or does it pass as part of the intestacy provisions.
A son works in the business so H would like him to become sole owner on his death, and thinking pass Ws share to him but need clarification of above to see if can be done and how to go about it.
My understanding is that a statutory partnership is dissolved immediately upon the death of any partner.
W’s entitlement upon dissolution would pass under the intestacy rules.
Is the value of the estate within the statutory legacy to H? In which case H might consider a variation in relation to W’s entitlement on the winding up of the partnership (W’s share).
If the value of the estate exceeds the statutory legacy, is the value of W’s share of the partnership within the son’s entitlement under the intestacy?
If either apply, H and the son might enter into a contractual partnership to avoid similar issues arising on H’s death.
If neither apply, though, it may be necessary for the son to, in effect, “purchase” W’s share of the partnership.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thanks Paul. From what I had read prior to posting here, the partnership dissolves. But thanks for confirming.
It is early days so no valuation yet, though I explained Intestacy to him (Stat legacy etc) and advised valuations required for Ws assets and business interests. Will be touch and go re: Stat Legacy covers it as includes heavy duty plant and machinery. Thankfully there is an accountant and last 3 years accounts are in place.
At this stage my instruction is limited to Will/LPAs, with intention I may be instructed re: Ws estate.