PARTNERSHIP DISSOLUTION

WHAT IS A PARTNERSHIP DISSOLUTION AGREEMENT? It is just what it sounds like it is. A Partnership Dissolution Agreement is a document drafted to officially end the existence of a partnership. Since a partnership is a legally recognised business structure, a written agreement must be completed before the partnership can officially be concluded. A Partnership Dissolution Agreement allows all the members of a partnership to do this with ease.

WHAT IF WE CAN’T AGREE TO THE DISSOLUTION? If the partners cannot come to an agreement as to how they will end the partnership, they usually will have to refer to the terms of the original Partnership Agreement. Additionally, if the Partnership Dissolution Agreement is signed and agreed to by all parties, but in the process of dissolution a conflict arises that cannot be settled, the agreement should include a method for settling such disputes. This is usually accomplished by the inclusion of an arbitration or mediation clause in the dissolution agreement.

WHAT DO I NEED TO INCLUDE IN THE PARTNERSHIP DISSOLUTION AGREEMENT? Before you can successfully end the partnership, you must ensure the dissolution agreement includes some needed information. The document will have to state what the various partner’s interest are, what kind of distribution of assets or debts will take place, the date of dissolution, etc. The details of a dissolution agreement must be complete and make it clear to all parties what happens to the partnership assets and interests. If the partners are to receive payments or portions of the partnership’s liquidated assets, these amounts will have to be stated in the agreement.

DO WE HAVE TO INCLUDE A FINAL FINANCIAL ACCOUNT? Almost always. Before the partnership can conclude business, a final financial inventory will have to be made. These are usually incorporated into the Partnership Dissolution Agreement, either by reference or directly.