When a business partner passes away, the remaining person has to make some big decisions. Grief can also make the general aspects of dissolving the partnership even worse. When the passing of a partner is unexpected, it can often occur at crucial times in the growth of the company. Below, we discuss the steps you need to take when dealing with the passing of a business partner.
What Options Do You Have After the Death of a Business Partner?
When a business partner passes away, you have several choices to make regarding the future of the business. None of them should be taken lightly and you should seek advice from a professional and those close to you, such as family and friends. The first option is to liquidate the business entirely. However, you should decide how you will then earn a living and if it is the right time to sell.
The second option relates to the heir or those who inherit your former partner’s side of the business. They may have left it to close family or friends. You could work alongside them, though this can prove problematic if they have no prior experience or you do not work on a personal level.
If this is the case, you have two last options: Buy their share or get them to buy yours. In both cases, working out a price can lead to friction and conflict. However, if done correctly the former option is usually the most viable, as the heirs then get a cash inheritance of sorts and the owner gets to continue running their business.
Keep Personal and Business Assets Separate
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It may not always be possible, but if you can, keep the business and personal areas of the deceased’s estate separate. Work on them, including how they are handed out or dissolved, as two separate problems. This usually occurs if the business partners are in a civil partnership or marriage. They may even have been close friends and personal assets may have been left to the remaining partner.
In these instances, it helps to get any matters resolved as quickly as possible and with the least fuss. Should the remaining partner be granted personal assets then it helps to turn them into cash as quickly as possible, so that business matters can be dealt with. Some companies will help with a probate house sale, to get the best and quickest deal possible, allowing the focus to remain on business and overcoming grief.
What Happens if You Have No Partnership Agreement?
When the business started, ideally, the people in it would have made a partnership agreement. This sets out the terms of the partnership and crucially, what happens if one partner passes away. It is often one of the first documents consulted regarding what happens to the business. Without an agreement, the partnership will be annulled if one partner dies. However, it is possible to continue trading under the business name.
None of this comes easy and major decisions should be thought out carefully. Think about what is best for the business but more importantly, what is best for the person left to run the company. By knowing what the options are, you should be able to make a more clear assessment.
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