A Case For A Partnership Agreement

2162 WordsMay 24, 20169 Pages
10. Kathleen and Jim are business partners at a consulting firm. Upon Jim’s sudden death, his widow claims that she is entitled to a share of the firm’s assets or should be able to take his Jims place as Kathleen’s partner. Is she entitled to her claims? Why or why not? The outcome of this case depends on whether or not a partnership agreement was formed prior to the partner’s death. If the partnership agreement wasn’t formed, general partnership State statues will take default (Clarkson, 2015, p. 721). However, a partnership agreement will always override state laws. If the provisions allow the partnership to continue after a partner’s death, the wife will be entitled to her husband’s shares and if the provisions don’t state otherwise she will also be able to take over his place in the firm (Wright, 2016). If a partnership agreement does not exist, most states will require a partnership to dissolve after a partner’s death. The deceased partner’s shares will be used to pay off any debts or obligations and the remainder funds will be distributed to the surviving partners (Wright, 2016). If the deceased partner includes his wife in his will, then a portion of the funds will be distributed to his wife after the dissolution. If his will is in probate, the funds will be distributed to his estate (Wright, 2016). A major disadvantage of not having a partnership agreement, is the risk of the spouse demanding her inheritance immediately (Wright, 2016). Since the partner’s capital is
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