Partnership Death of a Partner Considerations
The death of a club member is a sad experience for clubs. From a business perspective, it is best to handle this in the same way as you would handle a request for complete withdrawal. This includes the date used to value the partners account. You should not use the date of death as the valuation date nor use any other date given to you by the executors of the estate.
It is important that your club stay out of the settling of the estate to avoid becoming part of any legal complications you may be unaware of. To do this, make the final check out to "To the Estate of [DECEASED NAME] and deliver it to the partners last known address or to the executor of the estate if you know who this is. Let them determine how the money will be shared amongst the heirs. Do not let your club become part of how the money is distributed.
This includes situations where one of the partners relatives wants to "take over" the deceased partners share of the club. Payout the withdrawn members share as noted above, then let the estate distribute the proceeds to the heir. They may then choose to make a new investment in your club if they would like.
Clubs sometimes ask about beneficiary forms they can use for their members. For the reasons just given, we recommend against the use of such forms. It is best to have your partnership agreement restrict its obligation to your partners to the terms described in this section.
Disclaimer: statements are opinions expressed by bivio Customer Support and are not official statements from any government agency. These statements are not intended to replace professional legal or accounting advice. When in doubt, follow the advice of your lawyer or accountant who is familiar with your particular circumstances and the laws of your state.