The family then has two alternatives:

1. A member of the family could take over the deceased's position as a partner or appoint someone to act on their behalf.
2. Realize the value of the share by selling it.

Both these alternatives can present problems to the family and those remaining in the business.

Under alternative (i) a member of the family may not want to become involved in the business or may not have the right experience or qualifications to do the job. The family could also have a problem finding someone who would be willing and able to act on their behalf in the business.

For those remaining in the business, alternative (i) may not be attractive - they might, understandably, be reluctant to invite a member of the family to become a partner or a member of the Board, especially if that person does not have the relevant experience. This would particularly apply if the family had only a minority shareholding in a company or if the deceased's shareholding had been split between many beneficiaries on his death.

Alternative (ii) would probably be preferred by both the family and the remaining partners if the family could sell the share back to the business.

This, however, relies on the business has funds available for the purchase. The business may have to resort to liquidating some assets, borrowing the money or trying to find a replacement partner itself to buy out the family's share. It is not certain that any of these options will be open to the business, depending on its circumstances.

For the family, the sale of their share may present real difficulties if the remaining partners are unable or unwilling to buy out the share within a reasonable period of time. Shares of partnerships and small private companies are not generally readily saleable, and even if the family did find a buyer, they might not get the price they thought the share was worth, especially if it is a minority share. Of course, if the family did sell their share to a third party, it would be likely to lead to difficulties for the remaining business and possibly a takeover or merger, depending on the size of the share held.

Ultimately, if the family and the business cannot resolve the situation satisfactorily, it may lead to the business being forced into liquidation, with both sides coming out poorly.

A carefully written Share Protection Plan will ensure that on the death of a partner, a lump sum will be immediately available to the remaining partners, enabling them to buy back the share from the family, remain in control, and ensure the continuation of the business. Such a plan would consist of Life Assurance Plans combined with a share purchase agreement and General Power attorney in the name of another partner so that the other partner can use this document if a partner is either mentally incapacitated/missing/in a coma.