Partnerships and Limited Liability Partnerships

The partnership is a well-known and long-standing business association. In modern times, they are well regulated and mostly uniform across the states. Indiana has adopted what is called the “Uniform Partnership Act,” which is a statute regulating all aspects of Indiana partnerships.

According to Indiana statute, a partnership is “[A]n association of two (2) or more persons to carry on as co-owners a business for profit and includes for all purposes of the laws of this state a limited liability partnership.”^[1] Moreover, there is a legal test for determining whether two or more people have formed a partnership, namely:

There must be: (1) a voluntary contract of association for the purpose of sharing profits and losses, which may arise from the use of capital, labor, or skill in a common enterprise; and (2) an intention on the part of the parties to form a partnership.^[2]

Pursuant to the same statute, “[a]ny estate in real property may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name.”[3] It is important to note that, when a partner dies, the heirs of that partner are not entitled to receive a share of any real property as a co-owner – the real property remains in the possession of the partnership. Indiana law states:

When any partner retires or dies, and the business is continued …without any settlement of accounts as between him or his estate and the person or partnership continuing the business, unless otherwise agreed, he or his legal representative as against such persons or partnership may have the value of his interest at the date of dissolution ascertained and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest.^[4]

Even if the partnership “winds up” after the death of a partner, the heirs of the deceased partner do not necessarily take ownership interest in land, because “Where a partnership is dissolved, its debts paid, and its affairs would up, undistributed partnership property belongs to the former partners as joint tenants or tenants in common.”^[5]

[1] Curves for Women Angola v. Flying Cat, LLC, 983 N.E.2d 629, 632 (Ind. Ct. App. 2013), citing Indiana Code § 23-4-1-7

[2] Copenhaver v. Lister, 852 N.E.2d 50, 58-59 (Ind. Ct. App. 2006) (internal citations omitted)

[3] Ind. Code § 23-4-1-8

[4] Indiana Code § 23-4-1-42

[5] Engelking v. Estate of Engelking, 686 N.E.2d 932, 934 (Ind. Ct. App. 1997)