Are your client's partnerships prepared for the future?

The functions of a partnership are controlled by the Partnership Act in each state and territory. These Acts state that the death of a partner automatically dissolves the partnership unless an agreement is in place. Without a clear plan, the future of the partnership and its assets can be at risk.

Here’s what you need to consider for your clients in partnerships:

• Automatic dissolution: Upon a partner's death, the partnership is dissolved unless protected by an agreement.

• No agreement?: Without a formal partnership agreement, asset distribution occurs after settling debts, which can complicate the process.

• Buy-Sell Agreements: These agreements allow surviving partners to purchase the deceased partner's interests, ensuring smoother transitions.

• Risks of no agreement: Disputes can arise between remaining partners and beneficiaries, potentially disrupting the business's continuity.

• Action item: Ensure your clients have a comprehensive partnership agreement to provide clarity and safeguard against future challenges.

  
  

Encourage your clients to consult legal professionals to protect their partnership and beneficiaries' interests.