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The death of a partner does not automatically mean the end of a general partnership. By default, the general partnership is dissolved upon death, but with a continuation clause in the general partnership agreement, the remaining partners can simply continue the business.
The general partnership in brief
A general partnership (VOF) is a partnership in which multiple partners operate a business under a common name. It is easy to set up — without a notary — but must be registered in the Commercial Register, including the UBOs. Please note: partners are jointly and severally liable for the debts of the VOF.
What happens upon death?
As a general rule, a general partnership ends when a partner dies: the partnership is then dissolved. This can be undesirable for the remaining partners, as a well-performing business would then have to close or be re-established.
The continuation clause
With a continuation clause in the general partnership agreement, you agree that the business will be continued by the remaining partners in the event of death (or withdrawal). This is often combined with a survivorship or takeover clause, which stipulates that the deceased partner's share passes to the remaining partners at a specific value, with compensation for the heirs.
Document it clearly in advance
Without clear agreements, disputes often arise with the heirs regarding continuation and valuation upon death. A well-drafted general partnership agreement including a continuation and takeover clause prevents this and provides certainty for all parties.
Frequently Asked Questions
Does a general partnership automatically terminate upon the death of a partner?
As a general rule, yes, unless you have included a continuation clause under which the other partners continue.
What do the heirs receive?
With a survivorship or takeover clause, the share passes to the remaining partners against compensation for the heirs, often based on an agreed valuation.
Do I need a notary for a general partnership?
Not for the incorporation, but a good written general partnership agreement with the right clauses is highly recommended.
Arrange your general partnership properly?
Our legal experts draft general partnership or cooperation agreements with a continuation clause. View our corporate lawteam or schedule a free consultation.
