Status Of A Partnership Upon The Death Of A Partner

The partnership of a deceased partner terminates upon his death. The deceased’s heirs can only be regarded as partners if a new partnership agreement is enacted between them and the surviving partners, whereby they agree to co-opt those heirs as partners in the business. Failing such a new partnership agreement, the heirs of the deceased will no longer be considered as partners in the company and it then becomes incumbent upon the remaining partners to evaluate, calculate and pay out the deceased’s partner’s share to his heirs as promptly and expeditiously as possible.

Until such a time that a new partnership agreement is not enacted, the remaining partners do not have a right to utilize and continue trading with the assets of the deceased partner. If they continue to trade with the deceased partner’s assets in order to further and enhance the business, then whatever subsequent profits and growth that the business attains, those profits will have to be assigned to the heirs of the deceased as well. The deceased’s heirs (in a Shirkat-e-Milk) will continue to be part and parcel of the growth in the business, until they are formally given their shares.