Which of the following might trigger a Disability Buy-Sell agreement?

A Disability Buy-Sell agreement is designed to protect a business in the event that a partner becomes permanently disabled and is unable to continue participating in the business. This scenario ensures that the remaining partners can buy out the interest of the disabled partner, thus maintaining the stability and continuity of the business operations.

When a partner becomes permanently disabled, it can create uncertainty regarding the future management and direction of the business. The agreement provides a clear mechanism for how ownership will be transferred and sets the terms for the valuation of the disabled partner’s share. This allows for a smooth transition and helps avoid potential conflicts or complications that might arise from a partner who is no longer able to contribute.

In contrast, the other scenarios listed, such as business expansion opportunities, the death of a partner, and a major business loss, either do not specifically relate to the need for a Disability Buy-Sell agreement or are typically addressed by different types of agreements. For instance, the death of a partner is covered under a similar but distinct buy-sell mechanism, focusing more on life insurance aspects. Therefore, the scenario that directly invokes the necessity of a Disability Buy-Sell agreement is the permanent disability of a partner.