Death of a Partner
A partner’s death dissolves a partnership. A deceased partner’s estate is entitled to receive his or her equity. The partnership contract should contain provisions for settlement in this case. These provisions usually require(1) closing the books to determine income or loss since the end of the previous period and
(2) determining and recording current market values for both assets and liabilities. The remaining partners and the deceased partner’s estate then must agree to a settlement of the deceased partner’s equity. This can involve selling the equity to remaining partners or to an outsider, or it can involve withdrawing assets.
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