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How Your Will Is Impacted by Ownership of Partnership Premises

on Monday, 23 August 2021.

The terms of your Will might interact with the way in which you own your share of a partnership premises, as illustrated in this must-read article for healthcare professionals.

Over the next few months we will be featuring regular articles on a range of private client topics relevant to healthcare professionals. Our first topic considers how the way in which you own your share of a partnership premises can affect your Will.

Dr Otto's Will

Dr Otto was a general practitioner at General Practitioners Surgery ('GPS') until he recently died.  The partners of GPS own the practice premises in their joint names as 'tenants in common'. This means that each of the partners owns a specified share of the property.

Dr Otto provided in his Will that his share of the practice premises is to go to his daughter, Jess, who is neither a GP nor a partner at GPS.

What Happens to Dr Otto's Share?

Generally, unless there's an agreement to the contrary, partners do not have the right to have a partnership asset held in their own names. This means that partners can't usually give away a particular partnership asset. 

However, if the partnership is solvent and there are other partnership assets that can bear the burden of the debts of the partnership, the courts are likely to uphold gifts of partnership assets to the named beneficiaries in deceased partners' Wills. 

GPS is a solvent partnership and its assets (other than Dr Otto's share of the practice premises) are sufficient to settle its debts.

GPS's partnership agreement is silent on the issue of what is to happen to a deceased partner's share of the beneficial title of the practice premises.  If the partnership agreement had included such a provision, and that provision was contrary to what is stated in Dr Otto's Will, the terms of the partnership agreement would have overridden the provisions of the Will.

Ideally, the property owning partners of GPS would have entered into a property trust deed. The deed would have set out the rights and obligations of each property owning partner, including what happens to the share of a deceased partner.

As it is though, the surviving partners of GPS must account to Jess for her father's beneficial interest in the property.

Coronavirus Legal Advice

If the surviving partners are unable or unwilling to sell the practice premises straight away, it is open to Jess to agree to defer receipt of payment for her share. However, it is always possible that she won't agree, in which case problems lie ahead.

How to Manage Ownership Arrangements

If you own your practice premises, check how you own it. It's worth pointing out that practice premises might also be leased to partners of a practice by a private landlord or by NHS Property Services. The legal issues relating to these types of ownership arrangements are outside of the scope of this article.

When considering the succession of your interest in practice premises, it is important to avoid any ambiguity that might lead to a dispute between the personal representatives of your estate and the surviving partners. The precise wording for the gift in your Will is significant and it is important to consider how the terms of your partnership agreement and any separate property trust deed interact with the terms of your Will.

How Can We Help?

Our Private Client, Real Estate and Healthcare teams work together to provide tailored advice to you about your Will, the ownership of your property, the terms of your partnership agreement and how those terms might affect the succession of your interest in the partnership premises.  It is important to review your Will and partnership agreement regularly, in particular after significant personal or professional events. 

For more information, please contact William Hollins (Associate in our Private Client team - 020 7665 0905) and/or Rachel Crean (Partner in our Healthcare team - 07387 025973). Alternatively please complete the form below.

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