Blog

by Daniel Jones

Retiring from a GP Partnership requires a careful and structured approach to ensure a smooth transition and to avoid the possibility of a dispute (which are usually costly). The process of retirement for a GP Partner will vary depending on whether there is a Partnership Agreement in place.

This article summarises the retirement process, covering both the process where there is a Partnership agreement in place in addition to the process where there is not.

With a partnership agreement:

A Partnership Agreement binds the Partners to the terms of the agreement, and an effective partnership agreement will contain provisions outlining the retirement and buyout process for when a Partner wants to exit the partnership.

Key steps:

1. Handing in notice of retirement in accordance with the partnership agreement.
2. Review of the agreement to ascertain the agreed upon retirement process.
3. Preparing the leaving accounts in accordance with the agreement.
4. If need be, drafting deed of retirement; (necessary if you wish to vary or depart from the terms of the Partnership agreement for a specific retirement).
5. Payout/handover.

Without a Partnership Agreement:

In the absence of a Partnership Agreement (i.e. in a Partnership at will arrangement), the retirement process is much more complex and may lead to issues if not managed carefully. The retirement of a Partner will usually result in the dissolution of the Partnership as the Partnership Act 1890 does not contain any provisions for the retirement/departure of a partner, meaning if a Partner wishes to leave they must trigger a dissolution.

As such, in this situation we advise you use a Deed of Retirement to enable and formalise a retirement in the absence of a Partnership Agreement by specifying the terms of the retirement/payout in addition to helping maintain the continuity of the Partnership, i.e. preventing dissolution.

Key steps:

1. Negotiations (the partners must negotiate the terms of the retirement, including notice and financial arrangements).
2. Ascertaining how the leaving accounts will be calculated (often requiring a professional valuation).
3. Negotiating and drafting a deed of retirement (the alternative to this document being a dissolution of the partnership).
4. Formal agreement and signing the deed of retirement.
5. Payout/handover.

How we can help:

We can assist with GP Partner retirements through our bespoke deed of retirement drafting service. Whether you have a Partnership Agreement or not, our experienced team will be able to guide you through the retirement process.

We also provide a bespoke partnership agreement service should you wish to avoid the more complex process of having a Partner retire in absence of a partnership agreement.

If you would like to enquire into our legal services, then please contact us on 0300 123 2014 or info@bmalaw.co.uk. Alternatively, you can send us an enquiry form via our website at https://bmalaw.co.uk/contact/.