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The 8 Bad "D"s of LLCs (Part 4 - Disability)

This is the fourth in a series of emails discussing eight bad “D”s to consider when drafting an operating agreement for an LLC.


The reality is that none of us is getting younger, and with age comes the likelihood of more health problems.  Given the uncertainties of life and a myriad of things that could result in some form of physical or mental disability, it is imperative that the operating agreement for an LLC deals with that possibility.  What happens if one of the members of the LLC becomes disabled in whole or in part?  What if a member is involved in a car accident and sustains a stroke or traumatic brain injury, or they visit the doctor after not feeling well and are diagnosed with some form of cancer?

Have you drafted your operating agreement to account for disability?  Does the LLC provide any sort of disability insurance to its member-employees?  Does the LLC rely on the activities of the now-disabled person in order to continue operating?  Is there a way to transition and keep the business moving forward?  Once again, approach the drafting as if you are the one who becomes disabled and are counting on the income from the LLC to be available to you at the time of your disability.

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