Deceased was a partner in business with husband - no partnership agreement.
Does surviving spouse inherit their share of the business on death or does it form part of residue?
Delving into my limited knowledge of partnerships, absent any agreement to the contrary, the partnership would be dissolved as a result of the death (s.33 Partnership Act 1890). The economic interest in that partnership (i.e. the deceased’s share of capital and current/future income in the business) would pass into residue.
There is no automatic vesting in the surviving partner akin to joint ownership.
In the absence of any partnership agreement, the Partnership Act 1890 applies and my understanding is that on the death of a partner, the partnership is dissolved and the estate of the deceased partner is entitled to be paid the value of their share as at the date of their death, which is a liability of the (former) partnership.
The deceased partner’s estate is entitled to a cash sum, not a share in the partnership.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you all for the replies.
All in line with my understanding.
Facts are parsimonious. In some H&W “partnerships” the facts may support the argument that the “business” may be more akin to joint ownership of assets as equitable joint tenants.
Or where the goodwill disintegrates on the first death, so is not realistically saleable, that the other business assets e.g. premises are so owned. Historic Income tax treatment and HMLR title are not conclusive though joint ownership of premises and a past active choice of a Form A may not be helpful. A sole registration of H can still be ambiguous but joint and no Form A is helpful.
It sounds like W is not entitled to residue. W and those who are entitled might be amenable to a s.142 variation giving W a short period IPDI and IHT spouse exemption followed by a PET or CLT within NRB plus or minus insurance.
Jack Harper