Death of a Partnership Member: Business Continuation Guide

General partnerships: the dissolution risk

Under section 33 of the Partnership Act 1890, a partnership is dissolved by the death of any partner — unless a contrary intention is expressed in the partnership agreement. This is the default rule and applies unless the partners have excluded it.

In practice, most professional and commercial partnerships have partnership agreements that include continuation clauses. These provide that the partnership continues among the surviving partners on the death of a partner. However, older or informal partnerships may not have this protection.

If dissolution does occur, the partnership must be wound up: assets are realised, debts paid, and the net value is distributed between the deceased's estate and the surviving partners in proportion to their shares. This is complex and often requires specialist partnership solicitors.

The partnership agreement

The first thing the executor should do is obtain a copy of the partnership agreement. Key provisions to look for include:

• Continuation clause: Does the partnership continue after a partner's death?
• Valuation provisions: How is the deceased's share valued? At open market value, book value, or another formula?
• Payment terms: Is the estate paid out immediately or over time?
• Cross-option or life insurance: Is there life insurance to fund the buyout?
• Pre-emption rights: Do surviving partners have the right to buy the deceased's share before it passes to beneficiaries?

The estate's entitlement

The deceased's estate is entitled to:

• The capital balance on the deceased's capital account (their share of the partnership assets)
• Any undrawn profits up to the date of death (the current account balance)
• Interest on the capital from the date of death until payment (if the partnership agreement provides for this)

The surviving partners must prepare a partnership account as at the date of death to establish these figures. A specialist accountant with partnership experience should be involved.

Liability for partnership debts

In a general partnership, all partners have unlimited personal liability for the partnership's debts. This means the deceased's estate may be liable for partnership debts that existed at the time of death.

However, the estate is not liable for debts incurred by the partnership after the death. Creditors can only pursue the surviving partners for post-death debts.

If the partnership is insolvent, the estate may receive nothing from its partnership share — and may in fact owe money to partnership creditors. This is a risk that executors must consider carefully before distributing estate assets.

Limited partnerships and LLPs

Limited partnerships (governed by the Limited Partnerships Act 1907) have both general and limited partners. The death of a limited partner does not necessarily dissolve the partnership. The death of a general partner may — check the partnership agreement.

Limited Liability Partnerships (LLPs) are separate legal entities (like companies) and do not dissolve on a member's death. The deceased's membership interest passes through the estate. LLP agreements typically address how a member's interest is valued and paid out on death.

Business Property Relief

A deceased partner's share in a trading partnership may qualify for Business Property Relief (BPR) at 100% for IHT purposes, provided the deceased had held the interest for at least 2 years. For the 2026 BPR changes, see our AIM shares and BPR 2026 guide and inheritance tax UK 2026–27 guide.

Practical steps

1. Obtain a copy of the partnership agreement immediately
2. Notify the surviving partners in writing of the death
3. Establish whether the partnership continues or dissolves
4. Commission a partnership account to date of death
5. Check for life insurance or cross-option arrangements
6. Check for outstanding partnership debts that may affect the estate
7. Obtain the grant of probate to negotiate on behalf of the estate
8. Seek specialist partnership and probate solicitor advice

For general estate administration, see our estate administration checklist, complete UK probate guide 2026, and applying for probate guide. For sole trader closures, see our death of a sole trader guide. For company director deaths, see our death of a company director guide. For IHT reporting, see our IHT400 guide. For executor first steps, see our executor first steps guide. For distributing the estate, see our distributing the residuary estate guide. Farra can help — get started here.