Hey Prince,
It happens quite a bit in the koryu arts. Not really frequently, but frequently enough that most doing koryu know about it. It often comes about when someone decides that they don't care for how the head of the school approaches things, and wants to change the way they're done. If you have achieved menkyo kaiden, full transmission of the art, then you can do that. If you haven't gotten to that level, then trying to do things your own way will cause you to be hamoned, thus distancing the school from what you are doing. I have also heard of it happening when someone seriously embarrassed their school through inappropriate behavior, causing the school to distance themselves from said individual.
As Henning has said, it happens much less frequently in gendai budo.
Paul Smith
"Always keep the sharp side and the pointy end between you and your opponent"