Team photo
Knaub and Company PC logo

Knaub & Company, PC

Certified Public Accountants

78 Meadow Village Drive, Suite E

PO Box 161030, Big Sky, MT 59716

 

Phone:  406-995-6040

Fax:      406-993-2772

  

Email: knaubco@3rivers.net

July 2018

Overcoming Disability Business

If you are a small business owner and have a partner, you may have agreements about what will happen to business ownership should one of you die or voluntarily leave. A buy-sell agreement should address these events and should also include the possibility of an owner’s major disability.


PUT IT IN WRITING

In the buy-sell agreement or in a separate agreement, clearly define qualifying disabilities that would trigger a buyout,
and the parties who get right of first refusal to buy the disabled owner’s share of ownership. This document should detail what would trigger mandatory and optional buyouts.


FUNDING OPTIONS

Next, explore funding options for buying the disabled owner’s share of the business. You might make regular installment payments taken from profits or investments put aside for this possibility, which could be a problem if either experiences difficulties. Or you could buy cash value life insurance on all the owners, with the business named as beneficiary, directing cash value to the business in the event of a qualifying disability.


Many agreements are funded by including long-term disability income insurance, which the business would buy on all partners. Talk to your tax, insurance and legal professionals to learn more.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.