There are many ways to approach succession planning, but there are some basic steps that should be taken to create a comprehensive plan able to stand the test of time:

Get a team together— Business succession planning involves a number of different disciplines, so you will want to include your attorney, accountant, and other key business- and estate-planning professionals.

Consider incorporation—Converting your company to a corporation helps to ensure it will continue to exist in the event of the death or incapacity of you or one of your partners. Corporate status provides for "perpetual existence" of the business and also limited liability for the business owner(s).

Groom your successor(s) well— Selecting and grooming a successor can take months or years to familiarize them with the finer points of your business. Thus, it is important to select a successor as soon as possible, and one who will be able to step into your shoes easily and improve the likelihood of a successful transition.

Document your desires— A will for a business is a comprehensive planning tool that details, in step-by-step format, your plans for the continuation of your enterprise. Include your management plan and, if appropriate, name your successor in the will.

An important component to a business will is a buy-sell agreement. A buy-sell agreement can obligate one party to buy, and the other to sell his or her interest in the business, following a triggering event, such as the seller's (owner's) death or disability. It can be structured in a number of ways: as an entity purchase (redemption) agreement, a cross-purchase agreement, a hybrid (combination) agreement, or a "wait-and-see" agreement. Have your planning team assist you in selecting the structure that will be most effective for your buy-sell agreement.

Back up your plans with insurance— Although a buy-sell agreement can help ensure your business will remain with your family or business partners in the event of your death or disability, you need to make adequate funds available to fulfill the commitments of the agreement. Life insurance is a funding vehicle that provides adequate liquidity needed when a qualifying event brings about the sale of an ownership interest. Disability buy-out insurance on the owner(s) also is available to fund the purchase of the business specifically in the event of a disability.

Develop an estate plan that ensures adequate liquidity—Without your prior planning, you may be without provision or funds available to pay costly estate taxes. You can avoid that fate by purchasing enough life insurance to help cover the costs. Consider transferring part of your business ownership to family members involved in the business using certain gifting or sale techniques. While turning over some control of the business may be a challenge, it will shrink your assets and reduce the estate tax liability.

Discuss your plans with all parties involved—Eliminate any surprises by letting your family and management team know the general details of your business succession plan, such as who will take over as owner(s) and head of the company and why. Going through the business succession planning process with them will save your successor and your family a lot of concern.

Review and update your succession plan as needed— Once your plan is established, review it periodically with your team of professionals to address any changes that may be required. If you have had a major change in your personal life, such as a divorce or change in your personal will, be sure to immediately revise your business plan as necessary.