What is a key requirement for a disability buy-sell agreement?

A disability buy-sell agreement is a crucial component for business partnerships as it outlines what happens to a partner's share of the business if they become disabled. One of the key requirements for this type of agreement is that it must be documented in writing. This ensures that all parties involved have a clear, legally binding understanding of the terms. A written agreement helps prevent potential disputes in the future and provides a framework for executing the terms in the event of a partner’s disability.

Having such an agreement in writing serves to provide clarity on the processes to be followed and eliminates ambiguity. It specifies how the business will be valued, what conditions trigger the buyout, and the methods of payment, among other details. A verbal agreement, while potentially understood by the partners, lacks the enforceability and clarity provided by a written document.

The other aspects, such as mutual agreement or terms for financial compensation, are important but do not hold the same universal requirement as a written document. While covering full ownership transfer may also be a consideration within the agreement, the fundamental need for it to be documented is paramount to ensure legality and enforceability.