The deceased was 1 of 4 partners in a business partnership at the time of his death. I am advised there is no partnership Deed setting out what should happen on death etc.
The 4 partners essentially brought a Retail Unit with the aid of a mortgage back in the 2000s- all contributing equals shares and this was rented out and each partner receiving draw down/dividends each year from profits.
Accounts have been prepared each year and continue to be prepared, although the new executor struggles to get hold of any copies of these (noting as a partnership - nothing available with Companies House).
The Deceased died back in 2010 but the previous executors (now removed by the Court) just did not deal with this and the remaining 3 partners who had a mortgage with a Bank deliberately did not tell the bank about the death of the deceased until 7 years later.
The Deceased 25% share was left to his 4 adult children in 4 equals shares. 2 of his adult children were original Partners with the 3rd original partner being a good friend.
The Retail Unit in the partnership is therefore technically owned as follows:
Partner 1 - 31. 25% (original 25% + 6.25% inherited share)
Partner 2 - 31.25% (original 25% + 6.25% inherited share)
Partner 3 - 25% (not a beneficiary in the Estate)
New Partner 4 - 6.25% inherited share
New Partner 5 - 6.25% inherited share
The 2 new partners (4 and 5 - the Deceased’s 2 youngest adult children) - have never really wanted to be involved in the business and have been asking for the partnership to be dissolved from day 1 and to be brought out of their 6.25% shares. They also don’t believe they are receiving any kind of draw downs like the other partners.
Their 2 older siblings and the other partner just continue to ignore this request.
The question I therefore have:
The 2 younger beneficiaries want to force the ‘original partnership’ to formally dissolve. Should the cost of formally dissolving the partnership be a cost of the estate on the basis ‘technically’ the ‘original partnership’ should have ceased at the date of the Deceased’s death or should the 2 younger beneficiaries who want ‘out’ be funding this personally themselves.
Is this actually a partnership or merely joint ownership of property per s2(1) and ss 1(1) and 45 PA 1890? The answer governs what rights and remedies are relevant. You say " there is no partnership Deed setting out what should happen on death etc." Is there any document at all evidencing a partnership? The lack of any such document is not conclusive.
If there is a partnership in law the Act will apply but if not TLATA 1996 will apply e.g. the court can order a sale under s14. The mortgage will govern who is responsible for the debt as regards the mortgagee but among the mortgagors the burden may be different by agreement or operation of law. Claims may be formulated in the alternative. As some of the estate has devolved on the older siblings, who are apparently disposed to be difficult, the executors need to consider how far they can pursue the matter as PRs on behalf of the estate and at its cost or whether any claim is that of the two siblings with 6.25% each.
I think Jack Harper had this right: it is a joint ownership of property whatever the accounts say. Therefore, it is land law and trust law that applies here. Have you established whether the original 4 owners held the title as joint tenants or as tenants in common? If the former, then the surviving co-owners now own a 1/3rd share each. If the latter, then the surviving co-owners hold the legal title on statutory trusts as to a ¾ share for themselves in equal shares and as to the remaining ¼ share for the deceased’s estate. The deceased’s PRs should assent to the vesting in the deceased’s beneficiaries of his share and the surviving co-owners should, ideally, execute a declaration of trust setting out the beneficial interests on which they hold the legal title.
I believe that the beneficiaries unrepresented on the legal title could pursue the deceased’s PRs for due execution of his estate. As beneficiaries of the trust of land, they could also demand proper access to the accounts of the trustees of the legal title.
Graeme Lindop Probate Consultant Coles Miller Solicitors LLP
Good advice from Graeme. I never take anything for granted on here but the implication is a tenancy in common subsisted since, if it did not, the attempt by the deceased to leave his share by Will was a nullity. If it did, some scrutiny of the title at HMLR is crucial and one hopes a Form A restriction applies. I think if the deceased was on the register that the surviving proprietors can use form DJP to have his name removed. No doubt this will be essential at some point but it might be a fast one about to be pulled. Not being a conveyancer I am not sure whether and in what circumstances any further restriction is available (? Form Q} and if so how hostile it would be.
If the deceased’s Will leaves specifically his “partnership share” and he was not in partnership there might at least be a question to address on interpretation of what that means. He could of course leave such a share even if he was not a tenant in common of any underlying partnership property, which again might be open to interpretation as to what such share comprised.
