Commentary

I6.212 Accruers and options for partnerships

IHT, trusts and estates

I6.212 Accruers and options for partnerships

I6.212 Accruers and options for partnerships

In the absence of any contrary agreement, a partner would expect that on his retirement or death he, or his estate, should receive from the partnership an amount equivalent to the balance on his capital account, after allowing for any necessary revaluation of the partnership's assets. The making of such a payment might involve either the realisation of assets needed for the continuance of the partnership business, or increased borrowings with their attendant costs. It is not uncommon, therefore, for a partnership agreement to provide either:

  1.  

    •     that the share of a deceased or retiring partner should accrue automatically to the continuing partners, either with or without payment, or

  2.  

    •     that the continuing partners should have the option to acquire the share of a deceased or retiring partner at some agreed value, or according to some agreed method of valuation

Accruers (rights of succession)

It was stated in I6.211 that any partner who contributes capital to the partnership must suffer a diminution in his estate, however marginal. A contributing partner who also accepts that the capital he contributes will, on his death or retirement vest in another, must suffer a

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