In a universal partnership of profits, what happens to property owned by partners at the establishment of the partnership?

In a universal partnership of profits, the property owned by the partners prior to the formation of the partnership generally continues to belong to the individual partners. This type of partnership is characterized by the sharing of profits from business operations, but it does not automatically entail that individual partners' pre-existing properties are transferred to the partnership or considered partnership property.

Each partner retains ownership of their individual assets, and the partnership itself only encompasses the profits generated through the partnership's business activities. The rights to these profits are shared among partners according to the terms of the partnership agreement, but the underlying property remains in the individual ownership of each partner.

In contrast to the other options, choice A would imply that property transfers to the partnership, which contradicts the nature of a universal partnership of profits. Option C suggests an equal sharing of property among partners, which is not an inherent characteristic of such partnerships. Lastly, option D would mischaracterize the property’s status by treating it as partnership property, which is only applicable to property acquired during the course of the partnership’s operations. Thus, the correct understanding aligns with the notion that the individual partners maintain ownership of their property outside of the partnership context.