What happens to a farm partnership if one partner dies without a written partnership agreement in Ontario?
Without a written agreement saying otherwise, Ontario's Partnerships Act generally treats a partner's death as an event that dissolves the partnership. That doesn't mean the farm stops operating overnight, but it does mean the legal default is winding up the partnership's affairs, accounting for its assets and debts and determining what the deceased partner's share was worth, rather than the surviving partner simply continuing on as before with the deceased's estate quietly stepping into their place.
In practice, the deceased partner's share becomes an asset of their estate, and the surviving partner and the estate trustee usually need to work out, by agreement, whether to wind up the partnership and divide its assets, or whether the surviving partner buys out the estate's interest and continues farming under a new arrangement. Without a written agreement setting valuation and payment terms in advance, that negotiation starts from a blank page, which can be slow and contentious, especially if the surviving partner needs the farm's operating assets to keep working the land through a growing season. A written partnership agreement addressing what happens on death is the standard way to avoid this uncertainty.
Key takeaways
- Ontario's Partnerships Act generally dissolves a partnership on a partner's death unless a written agreement says otherwise.
- The deceased partner's share becomes part of their estate, not an automatic continuation for the survivor.
- The surviving partner and the estate trustee must negotiate a wind-up or buyout without agreed terms to guide them.
- A written partnership agreement addressing death avoids starting that negotiation from scratch during a difficult time.