What Is a Partnership Dissolution Agreement?
Dissolution of partnership implies the termination of a partnership relationship. It goes for those cases when there is a change in the relation of partners when one of the partners ceases to be associated with the business. The other names for the document include cancellation of articles of partnership organization and dissolution of articles of partnership.
A Partnership Dissolution Agreement carries proof to the fact that two or more partners decided to end their business partnership. This formal document creates a plan for finalizing an inventory of the partnership’s holdings, working out obligations and debts, and paying any remaining assets to the partners. Thus, the partners affirm they are no longer individually liable for the partnership's debts and losses. No partner can make another partner do business without the other partners’ knowledge and consent. A dissolution contract is all the more effective if the partners didn’t have a partnership agreement that would contain the terms and conditions for terminating the partnership.
Choose one of our templates to create your own Partnership Dissolution Agreement in order to simplify the process of terminating your business relationship. You can ease off the separation for your partners by establishing a clear timeline, determining the roles and duties of each partner and distributing the division of the assets.
How Do You Terminate a Partnership Agreement?
You are free to create your Partnership Dissolution Agreements however you choose. Do keep in mind, however, that there are steps you need to follow to dissolve a general partnership. Firstly, a number of events can trigger the termination and the partnership will be dissolved upon the will expressed by all partners. The partnership will dissolve also if after one partner’s dissociation the remaining half dissolves within 90 days of the dissociation. Partnerships can be dissolved through a court order, as well, if it was engaged in criminal activity, for example. Secondly, you need to file a statement of dissolution. It is filed with the Secretary of State and limits liability on partnership acts or any omissions that may have occurred after the statement of dissolution. Finally, after the distribution of partnership assets and property took place, you need to wind up your business, meaning clear up your debts to the creditors and distribute the remaining money to the partners.
In short, you need to review your agreement, take a vote to dissolve, pay debts and distribute your assets, notify your creditors, clients, and suppliers, pay your final taxes and registration fees.
Can a Partnership Continue after Dissolution?
A partnership may need to come to an end. Your partner may have died or left, and the business may have to dissolve. The dissolution of a business does not automatically mean it is terminated. The business will continue while the assets are being split. The partnership terminates when all operations cease and the assets are disposed of.
This template demonstrates a General Partnership Agreement of Dissolution based on a legal document. It is important to note, however, that it does not replace professional legal advice or other expert assistance.
This is a more detailed legal document template called Partnership Dissolution Agreement. This partnership is formed under a written partnership agreement that takes up 4 pages and concludes with a clause on successors.