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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3759
Experience:  Solicitors 2 years plus PQE
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My Dad is in business partnership with his brother and they

Customer Question

My Dad is in business partnership with his brother and they have no partnership agreement. His brother just died and although he hasn't yet seen a will, his sister has said that the will states that his share of the business be left to their 3 sisters and they should have decision making power as well as a share of the profits. As I understand it, this can not happen as per the Partnership Act of 1890 the partnership would need to be dissolved upon the death of one partner. The sisters would therefore be entitled to the monetary value of their brother's share rather than any hand in the running or any other element of the business? Is my understanding correct or are there any loopholes that would enable them to gain access to the business?
Submitted: 1 year ago.
Category: Law
Expert:  Alex J. replied 1 year ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. You are correct - S.33 of the Partnership Act states that on death of a partner the partnership is dissolved. The only way they could gain access to the business is if they were made partners as well (sharing their fathers capital), this would require your father's consent. Your father has to consent to them joining the business, the effect of this is akin to dissolving the partnership and reforming with them to reflect the new split in capital (i.e 50% to your father and 50% split between the other three partners). Alternatively your father has to treat the partnership as dissolved and look to sell the assets or business as a going concern. Does your father wish to carry on trading?
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Customer: replied 1 year ago.
My Dad does not wish to carry on trading, particularly as he doesn't get on with the 3 sisters. They are likely to try and take over and he doesn't want that so his intention would be to cease trading and sell the assets.
Customer: replied 1 year ago.
Also, thankyou for your response!
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. If the sisters want to carry on trading why doesnt he suggest that they appoint an independent valuer - come to a valuation and then he can sell them his share? If they do not have the money to pay now he can agree staged payments and take charge over the partnership assets as security.
Customer: replied 1 year ago.
I will suggest that. There is quite a lot of debt to be covered in the mean time. If he ceased trading, would 50% of the debt need to be covered from the estate of the deceased partner if the business assets didn't cover this?
Expert:  Alex J. replied 1 year ago.
Hi, Thank you. The partners split the assets and liabilities equally. Therefore any liabilities not covered by the assets will be covered by the estate of the other partner.
Customer: replied 1 year ago.
Thank you very much for all your help today, it is much appreciated.
Expert:  Alex J. replied 1 year ago.
No problem. I wish you the best of luck. If I can assist any further please do not hesitate to contact me. Kind regards AJ