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Death of partner and IHT

A partner who dies in service will, like any other person, be deemed to have made a transfer of value immediately before his death of an amount equal to the value of the whole of his estate at that time¹ — see I4.101 and I4.111. If, therefore, his partnership share continues to form part of his estate at the relevant time, the value of that share must be brought into his estate chargeable to IHT. If that share is unfettered by any option or accruer arrangement its full value will have to be brought into account — see I6.212. Under the Partnership Act 1890, s 44 the deceased partner's estate would be entitled to his share on a dissolution of the partnership.

If, however, the surviving partners have an option to acquire the deceased partner's share, the question arises whether the existence of the option affects the valuation of that share immediately before his death. It follows from what is said in I6.231 that the special rules in IHTA