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Preparing for the death or disability of a partner is something which should be addressed in the partnership agreement. Many partnership agreements provide for the surviving partners to have the option to purchase the interest of the deceased partner for a set value within a certain amount of time after death, commonly 60 to 120 days. In addition, if a partner becomes disabled and is no longer able to perform his/her duties under the agreement, the non-disabled partner again is given the option to purchase the disabled partner’s share, usually within six months of the disability.
Partnerships provide unique problems, however, not experienced by corporations, syndications, LLCs and even individuals in the case of the death of a spouse/partner. What happens when your spouse/partner passes on and you and the decedent owned 10, 20 or even more head of registered draft horses? Is it necessary to re-register every horse?
The answer to this question depends on the by-laws, rules, regulations and internal operating procedures of the various breed associations. A review of the various by-laws of the breed associations establishes that, as a general rule, “a record of all changes in ownership must be made on the records of the corporation.” (By-laws of the Belgian Draft Horse Corporation of America, Article VIII) Further, penalties can be imposed for failing to keep accurate records. For example, “any member or non-member who fails to keep an adequate system of records or fails to produce such records when required shall be subject to such penalties as the board of directors may see fit to impose.” (Article VI, l(j))
The breed associations have to pay particular attention to registrations and transfers involving partnerships in order to be certain the deceased spouse/partner’s share is legally released or signed off. Many owners think that presentation of a death certificate is all that is required. The death certificate merely establishes the date of death and does not relinquish the decedent’s interest in the horse. The decedent’s estate must sign the transfer in order to validly dispose of the decedent’s interest. Thus, in the situation where the partner buys out the decedent’s interest, the administrator or executor of the decedent’s estate must sign the transfer papers in order for the transfer to be valid.
The next question becomes at what time must the transfer be made on the breed association records in the case of a death of a spouse/partner? Again, this question is answered by reviewing the by-laws of the various breed associations. The Belgian Draft Horse Corporation of America, at Article II, Section 3, answers the question and reads as follows:
“Membership in this corporation shall automatically terminate with the death, resignation, corporate dissolution or expulsion of said member. Provided that upon the death of an individual member, said member’s executor, administrator or legal representative shall have one year after the date of death of said member to cause to be registered or transferred upon the books of this corporation each animal...provided further, that in the event of the death of a member of a partnership, dissolution of partnership, including divorce, where the membership stands in the partnership name, the same rule shall apply as in the case of death of an individual member, provided also that the surviving partner or partners shall have the same privilege of registering and transferring each animal owned by said partnership within a period of one year from the date of death of said deceased partner.”
The Percheron Horse Association of America provides in similar fashion that every change in ownership must be represented by a separate transfer. Article VII, Section II, of the Percheron Horse Association of America By-laws reads as follows:
“A complete chain of transfers must be furnished in all cases, from the breeder or importer down to the present owner. Each change in ownership must be represented by a separate transfer, together with a required fee for each transfer.”
However, the Percheron Association does not consider the death of a spouse as a change of ownership where the registration is in name of husband and wife at the time of death. Even so, should the surviving spouse desire it, such transfers can be made for a reduced fee. Article VIII, Section 5 of the By-laws reads, “When title on an animal has been received by inheritance, on application made and satisfactory evidence furnished, such title shall be transferred on the records of the Association to the person or persons inheriting such animal or animals, upon payment of a fee of $2.00 to Members and $3.00 to non-members for each animal so inherited.”
Thus, it appears clear that in the case of the death of a spouse/partner, any registered Belgian must be re-registered in the surviving spouse/partner’s name and that this should be done within one year from the date of death of the deceased spouse/partner. In the case of a registered Percheron, however, a surviving spouse does not need to file a transfer until he/she sells the animal. If, however, they would like the transfer made, a reduced fee will apply. This further emphasizes the necessity to fully understand your respective breed association policies.
Of further importance is to keep in mind the actual transfer fees. The breed associations commonly charge an amount based on the number of days from the date of sale. For example, the Belgian Draft Horse Corporation of America charges a $20 transfer fee for members if done within 30 days of the date of sale. This fee is increased depending on the number of days and whether or not you are a member or non-member. If the individual applying for the transfer is a non-member and if it is 90 days past the date of sale, the fee is $170 per horse. Remember that the general rule is one year from the date of death which is when the time period should begin to run. This will allow the surviving spouse/partner and/or estate to hopefully have adequate time to make the necessary adjustments and prepare for the transfer registration of the horses.
The death of a spouse/partner is a difficult time especially where the partnership is family-oriented. The cost of transfer can be significant where there is a great number of horses involved. It is suggested that breed associations not require re-registration where no transfer of the horse is made out of the partnership or where the surviving partner purchases or obtains ownership of the horses (as the Percheron Association handles the death of a spouse). The breed association will be protected in that it would require the estate’s signature at time of transfer to a third party, thereby insuring proper chain of title, and, at the same time, save the surviving spouse/partner the expense and paperwork of re-registering all the horses at one time with the associated cost thereof.
If you are faced with the situation of a deceased spouse/partner and the issue of registration of the horses, you should review very closely the by-laws, rules and regulations of the breed association. You should also check with the breed association and be very clear on the surviving ownership interest in the horses as well as any estate interest. Hopefully, the matter will be handled as suggested above, in order to comply with the breed association requirements and save the surviving partner or family members the additional time and expense of re-registration. If not, communicating your opinion and concerns to respective board members in regards to the current policies may prove beneficial.
Enough legal talk—it’s time to hitch horses!
Ken is a practicing attorney in Myerstown, Pennsylvania, where a good bit of his practice involves negligence cases. Ken and his wife, Karen, own Sunny Hill Farm Belgians, and they have been exhibiting their six horse hitch for the past few years at most major shows in the east.