If you were unable to be there to run your company, what would happen to it? Would your family members, co-owners, managers and/or employees know what to do, and would they have the guidelines and tools they would need to help the business survive and thrive?

The main issue in succession planning is to provide adequate funding when ownership of a business is transferred, so that it is accomplished with minimal difficulty. Life insurance, individual disability insurance and disability overhead expense insurance are key planning tools. These products provide the dollars needed to keep your business running smoothly. They also provide a fair share of the company's worth to all involved with minimal conflicts.

Your key employees, partners or even a knowledgeable competitor can be beneficiaries, assuring they will have the funds to purchase the business entity from the remaining interested parties and continue the business when you either retire or die.

Keep in mind that any financial planning for the business will have a direct affect on your estate. Careful consideration should be given to the estate and gift taxes associated with transferring your business interest to family members. Your financial professional should be instrumental in defining these pitfalls and helping minimize the possible transfer headaches. Your financial professional should be aware of all the pieces and can help design the most effective method for passing on your business. Don't fall into the trap that jeopardizes too many family-owned businesses—the failure to properly prepare for a transition in ownership or a lack of adequate funding to complete your financial goals.