As partner in a business, should I arrange a “Partnership Agreement”?

A business partner passing away can be tough both personally and professionally. You might have worked together for a long time and built the business up to be a successful enterprise for both of you. What happens to your share in the business depends on a number of factors.  


Both you and your partner, along with your respective spouses, enter into this agreement to negotiate the terms and conditions of the transfer of the partnership share in the event of death or permanent disability. These are often created to ensure the process is clear and certain and will run smoothly if such an event occurs

Under English law, the death of a partner means that the partnership is dissolved regardless how successful the business. By putting in place a share protection strategy, the partnership can continue to trade.

As an example, this fictitious company structure is as follows:

Glowing Electrical Services (GES) is a partnership of Clive Sparks, Alan Cable, Richard Power and Dave Current. GES is currently worth £100,000 and has equal partners. GES wants to have protection in place should any of the partners die unexpectedly.

A simple solution is for each partner takes out a £25,000 life assurance policy. The policies are written under Trust for the other partners, with all four of them as Trustees. Each has signed a Cross Option Agreement (COA).

In the event of Clive Sparks’ premature death during the policy term, the life office would pay £25,000 to Alan, Richard and Dave as Trustees. They would split the money between themselves as surviving partners and beneficiaries, and each use their money to buy Clive’s share from his wife Sandra.

Clive’s estate would receive £25,000 cash for the value of his share in GES. Alan, Richard and David can continue as equal partners in GES as equal partners with no further obligation to Clive’s wife.


Nigel Taylor

Cert PFS, Dip FA


This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case