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Partnership Dissolution Agreement

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Updated October 15, 2026

A partnership dissolution agreement is a document used by business partners to formally bring their business relationship to an end. The form is especially important for setting out how partners will distribute assets, property, and outstanding liabilities.

Key Features

  • Establishes the timeline for dissolving the partnership. Provides the exact date after which the business relationship will cease to exist.
  • Assigns responsibility for winding-up tasks. Identifies which partners will have the responsibility and authority to wind up the business’s affairs.
  • Outlines the division of assets and liability. Describes the partnership’s remaining assets and how those will be allocated among the partners.
  • Releases the partners from future claims. Ensures that the partners will not make claims against one another in the future.

How to Make a Partnership Dissolution Agreement (7 steps)

According to the IRS, the vast majority (72.7%) of partnerships in the United States are limited liability companies (as of 2023).[1]

1. Name the Parties

Enter the information for the original partnership, such as the date of formation and type of partnership, as well as the names and ownership information for each partner.

Partner Details – The agreement should include each partner’s name, mailing address, percentage ownership interest in the partnership, and role, if applicable.

2. Add Details about the Dissolution

Specify the effective date of the dissolution and the reason why the partnership is ending. The form should also indicate whether the partners will file a Statement of Dissolution or similar document with the local state government.

3. Decide Who is Responsible for Winding Up

Indicate whether all the partners will be responsible for winding up the partnership’s unfinished business, or only a select few. If the latter, be sure to identify the Winding Up Partners by name.

4. Distribute Liabilities and Assets

The form should describe in detail how the business’s outstanding liabilities and debts will be settled, as well as how any remaining assets will be distributed amongst and between the partners.

5. Release Claims

In signing the document, the partners will agree to release one another from any and all claims, demands, or causes of action relating to the partnership.

6. Include a Dispute Resolution Method

Add a clause that specifies how much time the partners will engage in good-faith negotiation before moving on to mediation or arbitration. Including this information will help ensure a smooth resolution process should any disputes arise in the future.

7. Sign the Agreement

Each partner must sign the agreement.

Frequently Asked Questions (FAQs)

Can one partner dissolve a partnership by themselves?

Possibly, depending on the text of the original agreement and state law. However, a dissolution agreement should be signed and executed by all parties.

What if the partners cannot agree on how to dissolve the business?

If the partners cannot agree on the how to fully dissolve their business, third-party mediation or arbitration may be used to reach a final decision.

Does the partnership dissolution agreement need to be filed with the state?

The agreement itself is an internal contract that typically does not have to be directly filed. However, you may need to file a separate document, such as a Statement of Dissolution, with the state, depending on where the business is registered.[2]

Sample

Download: PDF, MS Word, ODT

Sources

  1. IRS – SOI Tax Statistics
  2. SBA – Close or Sell Your Business