I8.335 Death of partner in service
For IHT the most common occasion for the valuation of a partnership share is on the death of a partner in service. When a partner dies in service it is necessary to establish precisely what his rights were under the terms of the agreement, or, in default of an agreement, under the Partnership Act 1890 s 441. See I6.232 for an account of the various situations which may arise, but subject to any agreement to the contrary, his right is to a proportionate part of the partnership assets, including any goodwill, after deduction of all liabilities.
If, exceptionally, the death causes the partnership to be wound up and the deceased's estate receives an aliquot share, the amount received can be regarded as the value as at the date of death, in the absence of any special circumstances, subject to a discount for delay in payment.
In most cases, it is necessary to ascertain the hypothetical open market value of the partnership interest at the time of the death. This would particularly apply where the partnership articles do not provide for the death of a partner or where there are no partnership