What happens to a partnership account upon a partner's death?

Upon the death of a partner, the partnership account is usually frozen to protect the interests of all parties involved, including the deceased partner’s estate and the remaining partners. This freezing of the account ensures that no withdrawals or transactions can take place until the proper legal procedures are followed, which typically involve determining how the deceased partner's share of the partnership will be handled.

While the other options may seem plausible, they do not reflect the typical legal processes that protect the partnership and its assets during this transition period. Liquidating the account immediately would not take into account the necessary procedures required to settle the affairs of the deceased partner. Allowing immediate withdrawal by the remaining partners might create complications regarding the deceased partner's share, which is legally entitled to the estate. The dissolution of the partnership is also not an automatic consequence of a partner's death, unless specified in the partnership agreement. Therefore, freezing the account helps facilitate an orderly process in managing the partnership's finances following such an event.