Does an agreement of a partner not to "assign, mortgage or sell" his share of the partnership include transfers by will or intestacy?
3 Answers from Attorneys
You really need to look at all terms of the partnership agreement. Are there provisions dictating a right to purchase at death? Is there any other indication of how this would operate? If there is no guidance in other terms, I would normally expect that a transfer at death woud be covered. While death is not usually voluntary, it does result in a transfer of the interest. This gratuitous response does not create an attorney client relationship. The advice provided herein is generic, may not apply to your circumstances and is not to be relied upon in your actions. An attorney client relationship is created only upon execution of an engagement letter hiring me or my firm.
Most partnerships cease at death....so you rally do need to look at te agreement
If there are no provisions for survival of the partnership and either substitution of heirs or a buy-out provision, the partnership ceases to exist upon the death of the partner and the heirs of the deceased partner are entitled to the deceased partner's share of the net assets of the partnership, which often has to be decided by a court. So the business ceases and there is nothing to assign, mortgage or sell - just the remains of the business to be divided up. In short it is really pretty much a disaster when a partnership agreement has no provisions for dealing with the death of a partner. If you have such a provision, you REALLY need to get the agreement to a good business lawyer and have it re-written.
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