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Partnership Protection
Partnership protection schemes
There are three main types of scheme by which partnerships
can arrange to be able to take over or buy the share of the
business attributable to a partner who dies:
- The automatic accrual method
- The buy and sell method
- The cross-option method
The most schemes are set up using the cross option method.
This works as follows:
The deceased partner's estate has the option, within a specified
period, to sell the business share, and the remaining partners
similarly have the option to buy
Because the parties are not legally obliged to buy and sell
(and despite the fact that in practice, they almost certainly
will), those who inherit are deemed to receive the business
share and IHT business relief is available.
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