Partnerships - general notes: death or retirement of partner
S42 Partnership Act 1890
Partners may assign their interest in a partnership, or they may confer it on death or retirement to another person, but that does not automatically make the assignee a partner. A deliberate decision by the assignee and the surviving partners for the assignee to be made a partner is required. On the death of a partner, the estate of the deceased person is entitled, in the absence of any other agreement, at the option of their personal representatives, to the share of the profits made since death attributable to the use of their share of the partnership assets, or to interest at 5% per annum on their share, until their share of the partnership is paid out.
Depending on the precise terms of the agreement between the surviving partners and the personal representatives, the sums payable in these circumstances may be interest or annual payments deductible in arriving at the trade profits of the partnership and chargeable as savings income on the recipients.