Disability is a common trigger of an involuntary transfer. If someone cannot perform, they are not able to contribute to the business. They will, meanwhile, continue to own shares and receive distributions (not salary). That alone is a difficult pill to swallow for partners who are working tirelessly to build the business. In addition, a disabled person will have either an agent under power of attorney or a guardian acting on their behalf. That means that a third party will be participating in the business for them including possibly voting on matters. Like the other triggers, this could result in a disinterested, unqualified and undesirable person being your partner. In lieu of this result, you will often see a buy-sell provision which is usually funded with life and/or disability insurance to ensure that the disabled partner receives fair consideration in exchange for its shares.
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