Which term is used to describe an agreement that specifies how a business will handle shares of a disabled co-owner?

The term that describes an agreement outlining how a business will manage the shares of a disabled co-owner is known as a buy-sell agreement. This type of agreement is crucial in business partnerships, as it establishes the terms under which a partner’s ownership interest can be bought or sold if certain triggering events occur, including disability.

The primary purpose of a buy-sell agreement is to ensure business continuity and stability by clearly defining the process for transferring ownership interests. This way, if a co-owner becomes disabled, the other partners can buy out the disabled partner’s shares, preventing any potential disruptions in the business and ensuring that control of the company remains within the intended group of partners.

While a business continuity agreement focuses more broadly on how the business will survive various challenges, including disabilities, a disability insurance plan provides financial protection to the owner but does not specifically address the transfer of ownership shares. A partnership agreement, meanwhile, outlines general terms and conditions regarding the partnership's operation but does not necessarily include provisions about what happens in the event of a partner becoming disabled. Thus, the buy-sell agreement is the most appropriate term that encapsulates the specific situation involving co-owners and their shares.