By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Partnership Attorney

According to the Revised Uniform Partnership Act of 1997 (RUPA), an at will partnership meaning any partner can end the partnership whenever he or she wants. If that happens the partnership can be dissolved and the partnership’s business concludes once the partner notifies the other partner or partners that he wishes to withdraw.  An “at-will partnership” under the RUPA can be dissolved at any time.  In DeBaRon Assocs. v. Van Slooten, the partnership was an at-will partnership that was properly subjected to dissolution under the applicable law because there was no fixed period of time for the partnership business to be concluded. Partner 1 had formed a partnership with partner 2 who he trusted to manage his assets SOLELY for estate-planning purposes to ultimately avoid negative tax consequences after his death.  Because the time of his death was uncertain, the partnership he formed did not have the required “definite, fixed term.”  If it did, for some reason, have a definite fixed term – let’s say a psychic had told him he would pass on Date X, then it would possibly not be considered an at-will partnership properly subjected to dissolution.

Additionally, a second-requirement failed when the five year tax period expired after Partner 1’s death.  After the tax period (which had negative tax consequences) had expired, the partnership was no longer necessary or practicable, since that purpose which partner 1 had originally established it no longer existed. The reason…he was dead.

The rule of thumb to be learned from this case is that: “when it is not otherwise reasonable or practicable to carry on a partnership business in conformity with partnership agreement, it will be dissolved.”  Basically, if the purpose for which the partnership was originally created no longer exists, then the partnership can be subject to dissolution under the relevant New Jersey code section.  As well, some hallmarks of an at-will partnership that can be dissolved at any time, are that there was no fixed period or date and a particular undertaking ceased to exist.

To discuss your NJ Partnership matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.