Daniel, Thomas, and Lucas are partners in a law firm under a typical partnership agreement in which each owns an equal share of the business. Thomas dies suddenly of a heart attack. What will most likely become of the partnership?
A) It will immediately cease to exist and Daniel and Lucas will have to find new jobs.
B) Thomas's share of the business will automatically be split between Daniel and Lucas.
C) Daniel and Lucas will be able to purchase Thomas's interest from his estate.
D) Daniel and Lucas will have to quickly find a new partner to take Thomas's place.
E) It will dissolve, and Daniel and Lucas will lose personal property to pay business debts.

Question

Quizplus · Accepted Answer

In a typical partnership agreement, when one partner dies, their share of the business is inherited by their estate. Daniel and Lucas will have the option to purchase Thomas's interest from his estate and continue the partnership as before. Alternatively, they may choose to dissolve the partnership and split the assets and liabilities among themselves. Option A and E are not accurate as partners can continue the business or dissolve it legally. Option B and D are not accurate because the partnership agreement needs to be followed, and the handling of Thomas's share of the business is determined by the partnership agreement, not automatically split or given to anyone else.

Daniel, Thomas, and Lucas Are Partners in a Law Firm