Q: Who do we tell if my wife no longer wishes to be a partner in the business because of other work commitments?
May 21 2007
Answered by: Peter Done Ask a question
If there are changes to your partnership your rights and liabilities may change. The amount of partnership capital may change and so may your share of profits. It is important to understand what happens to your partnership when changes occur.
If your wife no longer wishes to be a partner in the business then the original partnership is normally dissolved and a new one must be formed to carry on the previous business. Retiring partners are entitled to remove their capital from the business.
If there are other partners involved then future profits may be split among the remaining partners unless they continue to use the retiring partner's partnership property.
Remaining partners and the retiring partner remain liable for the debts of the old partnership unless the remaining partners agree to take on the debts of the retiring partner. This does not include tax and National Insurance contributions, as partners are responsible for these individually.
The partners in the old partnership have the right to use partnership property to pay outstanding debts, and to split what remains between themselves in accordance with the partnership agreement.
There is no legal requirement to tell anyone of the change but it is suggested you discuss with both your solicitor and your accountant.
The retiring partner must give notice in writing of their retirement where the partnership was created by a deed.
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