Death of a partner and consolidation clause in a "societa' semplice": what is included in the succession?

When the bylaws of a "società semplice" provide that, upon the death of a partner, their share is consolidated by the surviving partners, the share is not necessarily transferred to the heirs. The estate generally includes a credit corresponding to the value of the share. It is this right, and not the percentage increase of the survivors, that must be reported in the inheritance declaration.

Death of a member in ordinary law

A "società semplice" is based on a personal relationship between partners. For this reason, the death of one partner does not automatically result in their heirs taking over the company.

Article 2284 of the Civil Code establishes that, unless otherwise provided in the articles of association, surviving partners must pay their shares to their heirs. Alternatively, they may decide to dissolve the partnership or continue it with their heirs, provided the latter consent.

The starting rule is therefore different from that normally applicable to shareholdings in corporations. In partnerships, the heir does not necessarily acquire the status of partner: instead, he or she acquires the right to receive the economic value of the position held by the deceased.

Article 2289 of the Civil Code specifies that, when the partnership relationship is dissolved involving only one partner, that partner or their heirs are entitled to a sum of money representing the value of the share. The valuation must be based on the company's financial situation on the date of the dissolution, also taking into account any transactions still in progress.

What does the accrual clause provide?

The articles of association may regulate in advance the effects of the death of a partner through an accretion clause, also called a consolidation clause.

The clause essentially establishes that the deceased partner's share is not attributed to the heirs, but is consolidated into the shares of the surviving partners, normally in proportion to the shares already owned.

Imagine a simple partnership with three partners, each owning a third of the share. If one partner dies and the consolidation clause applies, the two surviving partners can each own 50 percent.

This outcome does not necessarily require the deceased's share to be transferred to the survivors. The deceased's partnership relationship is terminated, while the other partners' shares are recalculated pursuant to the provisions already contained in the partnership agreement.

The National Council of Notaries reminds, in general terms, that in partnerships, heirs do not have the right to join the company, but have a right to a credit corresponding to the actual value of the share.

Is the accrual a transfer mortis causa?

In the consolidation clause that preserves the right to liquidation for the heirs — sometimes referred to as an “impure” consolidation clause — the increase in the survivors' shares is not normally classified as a transfer of the share mortis causa.

Surviving partners do not acquire the shareholding as heirs or legatees of the deceased partner. The increase in their percentages arises from the application of the partnership agreement, signed while all the partners were still alive.

Death constitutes the event that determines the dissolution of the relationship with the individual partner and makes the statutory mechanism operational, but does not determine an inheritance of the share in favor of the other partners.

The distinction is important: from a succession perspective, the asset or right passed on to the heirs is not the status of partner, but rather the patrimonial right to liquidation.

Even the most recent practice of the Revenue Agency confirms that, when heirs do not acquire the status of members, they remain exclusively entitled to the share of the liquidation of the company's assets.

What must be indicated in the inheritance declaration

The Consolidated Law on Inheritance and Gift Tax expressly regulates this situation.

Article 18, paragraph 1, letter d), of Legislative Decree no. 346 of October 31, 1990, establishes that, for the right to the liquidation of shares in simple partnerships, general partnerships, and limited partnerships, the taxable base is the value of the share determined according to Article 16 of the same Consolidated Law.

Therefore, the inheritance declaration should not indicate a transfer of the shareholding to the heirs, if the bylaws exclude such a transfer. The credit due to the heirs for the liquidation of the deceased partner's share must be indicated.

The credit becomes part of the estate assets and is attributed to the heirs according to their respective inheritance shares.

The declaration must be submitted within twelve months of the opening of the succession, generally coinciding with the date of death.

How is the taxable value determined?

Determining the value requires particular attention, especially when the simple partnership owns real estate, shares, financial instruments or other assets.

Article 16 of the Consolidated Law provides, for shares in non-shareholder companies, including simple partnerships, a value proportionally corresponding to the company's net assets on the date of the opening of the succession.

The reference is:

• to the latest published balance sheet or to the latest regularly drawn up inventory, taking into account subsequent changes;

• in the absence of a balance sheet or inventory, the total value of the company's assets and rights, net of tax-relevant liabilities.

In simple patrimonial partnerships, it is therefore necessary to reliably reconstruct the value of the company's assets and liabilities existing at the date of death.

The tax value of the credit does not necessarily coincide with the nominal value of the shareholding or the capital originally contributed by the partner. A simple partnership established with modest contributions may, in fact, own properties or investments of much higher value at the time of death.

It is advisable to keep suitable documentation to justify the valuation: updated financial situation, extracts of financial reports, property valuations, company debts and criteria used to determine the deceased's share of the estate.

Do surviving partners have to file an inheritance declaration?

No. The surviving partners are not required to file their own inheritance tax return for the increase in their percentages and, under the standard configuration of the clause, they are not required to pay inheritance tax on this increase.

They do not acquire the share as successors of the deceased and are not beneficiaries of the inheritance by virtue of the statutory clause.

The declaration of succession remains a duty of the heirs, those entitled to the inheritance, or any legatees.

This does not mean, however, that surviving partners can completely ignore the death. Company directors will normally be required to:

• verify the exact scope of the statutory clause;

• acknowledge the dissolution of the social relationship with the deceased;

• redetermine the percentages of the remaining members;

• take care of any updates in the Company Register and in the corporate documents;

• prepare the financial situation necessary to quantify the heirs' rights;

• proceed with the liquidation within the applicable terms and methods.

These are corporate and patrimonial obligations, not succession obligations for the surviving partners.

The most delicate case: the clause that excludes any liquidation

It is necessary to distinguish the clause that consolidates the participation of the survivors, recognizing the value of the share to the heirs, from the clause that provides that nothing is owed to the heirs.

This second configuration, sometimes referred to as a “pure” consolidation clause, presents much more significant critical issues.

The complete exclusion of the heirs' right to liquidation may raise questions regarding the prohibition of inheritance agreements, the protection of forced heirs, and the economic balance of the social contract. Article 458 of the Civil Code nullifies any agreement by which a person disposes of his or her future inheritance or of the rights he or she may have in an inheritance not yet open.

Even from a tax perspective, this situation cannot be automatically equated with the clause granting the heirs the full value of the shareholding. Effective January 1, 2025, Article 1 of the Consolidated Law expressly includes the transfer of assets and rights free of charge within the scope of the tax.

When the consolidation results in gratuitous enrichment for the survivors and a corresponding financial loss for the heirs, it is therefore necessary to separately evaluate both the civil validity of the clause and the possible tax treatment of the attribution.

The correct statutory setting

A well-worded accretion clause should at least clarify:

• that the heirs do not automatically take over as members;

• that the deceased's participation is consolidated in the survivors' participations;

• that the heirs are entitled to a credit corresponding to the value of the share;

• what the criteria and reference date are for the evaluation;

• who is required to carry out the liquidation;

• within what time frame payment must be made;

• how any disputes about the value should be resolved.

The purpose of this clause is to separate the continuity of the company from the personal succession of the partner. The surviving partners can continue the management without having to admit non-selected individuals into the company, while the heirs retain the economic value of the deceased's position.

Conclusions

In the presence of an accretion clause that recognizes the heirs' right to liquidation, the death of the partner produces two distinct consequences.

On a corporate level, the deceased's shareholding is extinguished and the percentages of the surviving partners are recalculated as provided for in the bylaws.

Inheritance tax law, heirs do not receive the status of partners, but acquire a credit corresponding to the value of their share. This credit must be reported in the inheritance tax return and is subject to inheritance tax, taking into account the exemptions and rates applicable to individual heirs.

Surviving partners are not required to declare the accrual or pay inheritance tax on it. However, they must comply with corporate formalities and correctly quantify the rights of their heirs.

The conclusion assumes that the clause is correctly worded and does not eliminate or unduly restrict the heirs' right to liquidation. Before applying it, it is therefore necessary to coordinate the text of the bylaws with the composition of the company's assets, the members' family structure, and the estate planning objectives.

For specialized advice on inheritance matters, you can contact us at 011-6605068

About the Author

Edoardo Tamagnone is a lawyer and partner at the law firm Tamagnone Di Marco Avvocati Associati . He focuses on international taxation, investment structures, and wealth planning for investors, family offices, and businesses with cross-border operations.

He works between Turin and international contexts, focusing on the intersection of law, economics, and global capital.

#succession #inheritance #assets #societasemplice #consolidation #lawyers