California Real Estate Practice Exam

If a partner dies in a partnership, the surviving partner:

1. Becomes a partner with the heirs

2. Becomes exclusive manager of the partnership business, and retains the title to the partnership property until he winds up the partnership business

3. Cannot transact any partnership business by himself until heirs of the estate are able to assume responsibility

4. Cannot transact any partnership business as death conceals the partnership

The correct answer is: Becomes a partner with the heirs

The concept of partnership in business law includes specific provisions concerning what happens when a partner dies. In a general partnership, the death of a partner typically does not automatically dissolve the partnership; instead, the surviving partner may continue to operate the business. If the surviving partner becomes a partner with the heirs, it indicates that the heirs inherit the deceased partner's interest in the partnership. This does not mean that they automatically become active partners in the business, but they do hold a financial interest and may share in profits or losses. The other options convey different scenarios that could potentially happen but often do not reflect the nuances of partnership law. For instance, while the surviving partner can act in a managerial capacity, the preservation of the deceased partner's interest and potential involvement of heirs complicates that scenario. Ultimately, partnerships operate on mutual consent, meaning that while a surviving partner may hold management authority, the interests of the heirs must also be considered, pointing to the importance of understanding that partnership relationships can persist even in the face of a partner's passing.