When a person recites Kiddush on Friday night, should he be standing or seated? And should he stand or sit when he drinks the wine after reciting Kiddush?
The Shulhan Aruch (Orah Haim 271:10; listen to audio recording for precise citation) writes that one should stand before beginning “Vayechulu,” and implies that one should remain standing for recitation of “Boreh Peri Hagefen” and the Beracha of Kiddush. The Rama (Rabbi Moshe Isserles of Cracow, 1525-1572), in his glosses to the Shulhan Aruch, writes that one may sit for the recitation of the Berachot after “Vayechulu,” and that it is even preferable to do so. He then adds that the custom among Ashkenazic communities is to sit even for “Vayechulu.” Sefaradim, however, follow the ruling of the Shulhan Aruch, that one should stand for the entirety of Kiddush. This is also the position of the Kabbalah, as mentioned in Sha’ar Ha’kavanot and codified by the Kaf Ha’haim (Rav Yaakob Haim Sofer, Baghdad-Israel, 1870-1939), who writes (271:22) that one should stand while reciting Kiddush in honor of G-d and in honor of Shabbat.
The reason behind the position requiring sitting for Kiddush is that when people sit together, they are more united and the setting is more formal. When people stand, they are not necessarily all in place at the table, as some may be roaming around the room, and the setting is thus more casual. In light of this concern, the Mishna Berura (Rabbi Yisrael Meir Kagan of Radin, 1839-1933), commenting on this Halacha in the Shulhan Aruch (listen to audio recording for precise citation), writes that those who stand for Kiddush must ensure to all stand in place by the table, in order to lend the Kiddush the formality it requires.
According to all opinions, one should sit while drinking the Kiddush wine. Thus, even though Sephardic practice is to stand for Kiddush, one should sit down before drinking the wine. This is the proper practice according to both Halacha and Kabbalah, as mentioned in the writings of the Arizal (Rabbi Yishal Luria of Safed, 1534-1572), and by the Ben Ish Hai (Rabbi Yosef Haim of Baghdad, 1833-1909), in Parashat Bereshit (Shana 2, 29). The Ben Ish Hai writes that it is not respectful to stand while drinking, and emphasizes that it is proper to be vigilant in this regard and ensure to sit for drinking the Kiddush wine.
Summary: According to Sephardic practice, one should stand for the entire recitation of Kiddush on Friday night, and everyone must ensure to stand in place at the table. The wine should be drunk, however, in a seated position.