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Wills for business partners
It is almost 20 years since I last spent any time studying the Partnership Act 1890 and if anyone had any questions on that topic I would direct them to one of my colleagues!
However, In the context of the preparation of Wills, and the administration of estates, there is one important element that a private client lawyer need to remember. If there is an unwritten Partnership Agreement and one of the partners dies, then under the Partnership Act 1890 the said partnership is automatically dissolved. If that happens any availability of Business Property Relief on the value of the deceased’s business interests will be lost, as the relevant conditions will not be satisfied. It is therefore vital to ensure that a partnership agreement does exist if you are in business with another and there is any value attributable to that business.
When preparing a Will and thinking about one’s assets, it will also be essential to consider what assets belonged to the partnership and what assets are owned by the individual, but used by the partnership. What will happen in the event of the death to those assets and arrangements?
If assets are owned within the partnership 100% Business Property Relief should be available. However, if the assets are outside the partnership, but being used by the partners, 50% Business Property Relief should still be available. Thought should therefore be given as to whether or not assets should be held in or outside a partnership, in conjunction with all other tax implications and existing agreements.
By giving the matter appropriate consideration, preparing an appropriate Partnership Deed and drafting a suitable Will, all of these issues can be addressed and appropriate solutions put in place.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.