I Have A Jointly-Owned Business And Able To Buy Out My Partner Should She Become Disabled And Be Unable To Work. Can Disability Insurance Be Used To Do This?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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If your partner suffers a disability that is expected to last for an extended period, your business will be put at risk by the lack of production from the disabled partner and by the need for a temporary replacement. The combination of reduced revenues and higher expenses could easily sink your business. If you have a disability buy-sell agreement in place (funded by disability insurance), each of the partners would be insured with company funds. The disability of a partner would trigger a flow of disability checks to buy out the disabled partner’s interest in the business. The remaining partner would then become the owner and the disabled partner would have cash equal to his or her ownership interest.

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