Section 10A-8A-10.03 - Death or disqualification of partner(a) In the case of a limited liability partnership performing professional services, upon the death of a partner, upon a partner becoming a disqualified person, or upon a transferable interest being transferred by operation of law or court decree to a disqualified person, the transferable interest of the deceased partner or of the disqualified person may be transferred to a qualified person and, if not so transferred, subject to Section 10A-8A-4.09, shall be purchased by the limited liability partnership as provided in this section.(b) If the price of the transferable interest is not fixed by the partnership agreement, the limited liability partnership, within six months after the death or 30 days after the disqualification or transfer, as the case may be, shall make a written offer to pay to the holder of the transferable interest a specified price deemed by the limited liability partnership to be the fair value of the transferable interest as of the date of the death, disqualification, or transfer. The offer shall be given to the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and shall be accompanied by a balance sheet of the limited liability partnership, as of the latest available date and not more than 12 months prior to the making of the offer, and a profit and loss statement of the limited liability partnership for the 12-month period ended on the date of the balance sheet.(c) If within 30 days after the date of the written offer from the limited liability partnership the fair value of the transferable interest is agreed upon between the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and the limited liability partnership, payment therefor shall be made within 90 days, or such other period as the parties may agree, after the date of the offer. Upon payment of the agreed value, the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall cease to have any interest in, or claim to, the transferable interest.(d) If within 30 days from the date of the written offer from the limited liability partnership, the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and the limited liability partnership do not so agree as to the fair value of the transferable interest, then either party may commence a civil action in the designated court, and if none, in the circuit court for the county in which the limited liability partnership's principal office within this state is located, and if the limited liability partnership does not have a principal office within this state, then the circuit court for the county in which the limited liability partnership's most recent registered office is located requesting that the fair value of the transferable interest be found and determined. The personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, wherever residing, shall be made a party to the proceeding as an action against that person's transferable interest quasi in rem. Service shall be made in accordance with the rules of civil procedure. The personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall be entitled to a judgment against the limited liability partnership for the amount of the fair value of that person's transferable interest as of the date of death, disqualification, or transfer. The court may order that the judgment be paid in installments and with interest and on terms as the court may determine. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the power and authority as shall be specified in the order of their appointment or an amendment thereof.(e) The judgment shall include an allowance for interest at the rate the court finds to be fair and equitable in all the circumstances, from the date of death, disqualification, or transfer.(f) The costs and expenses of any proceeding shall be determined by the court and shall be assessed against the parties in a manner the court deems equitable.(g) The expenses shall include reasonable compensation for and reasonable expenses of the appraisers and a reasonable attorney's fee but shall exclude the fees and expenses of counsel for and of experts employed by any party; but: (1) if the fair value of the transferable interest as determined materially exceeds the amount which the limited liability partnership offered to pay therefor, or if no offer was made by the limited liability partnership, the court, in its discretion, may award to the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, the sum the court determines to be reasonable compensation to any expert or experts employed by the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, in the proceeding; and(2) if the offer of the limited liability partnership for the transferable interest materially exceeds the amount of the fair value of the transferable interest as determined, the court, in its discretion, may award to the limited liability partnership the sum the court determines to be reasonable compensation to any expert or experts employed by the limited liability partnership in the proceeding.(h) If the purchase or transfer of the transferable interest of a deceased partner, a disqualified person, or a transferee is not completed within 12 months after the death of the deceased partner or 12 months after the disqualification or transfer, as the case may be, the limited liability partnership shall forthwith cancel the transferable interest on its books and the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall have no further interest in the transferable interest other than that person's right to payment for the transferable interest under this section.(i) This section shall not require a limited liability partnership to purchase a transferable interest of a disqualified person if the disqualification is for less than 12 months from the date of disqualification. A limited liability partnership may require the disqualified person to sell the disqualified person's transferable interest to the limited liability partnership upon any disqualification.(j) Any provision of a partnership agreement regarding the purchase or transfer of a transferable interest of a limited liability partnership performing professional services shall be specifically enforceable in the courts of Alabama.(k) Nothing in this section shall prevent or relieve a limited liability partnership from paying pension benefits or other deferred compensation.Ala. Code § 10A-8A-10.03 (1975)
Amended by Act 2020-73,§ 10, eff. 1/1/2021.Added by Act 2018-125,§ 7, eff. 1/1/2019.