Final answer:
Equal partners in a company should set up a buy-sell agreement, acquire disability insurance for each partner, and have a detailed succession plan to prepare for the potential disability of one or more partners.
Step-by-step explanation:
When equal partners in a company need to prepare for potential disability of one or more of the partners, several steps should be taken to protect the interests of the company and its remaining partners. To be prepared for such an eventuality, it is prudent for the partners to:
- Develop a buy-sell agreement which is a legally binding contract stipulating what happens if a partner becomes disabled, retires, or dies. This agreement could include disability insurance to cover the cost of buying out a disabled partner's share.
- Acquire disability insurance with a focus on key-person insurance for each partner, which can provide the financial means to help sustain the business during the transition period and possibly fund the buyout of the disabled partner's interest.
- Establish a succession plan, detailing how responsibilities and ownership interest will be handled and transferred in case a partner can no longer participate in the business.
These preparations ensure that the surviving partners have a clear path forward without having to negotiate terms during a potentially stressful and difficult time.