Death be not proud: ensure the future of your business with proper planning.

The fate of investment company Daniels & Bell, the first black-owned New York Stock Exchange member firm, provides a sobering lesson about bequeathal. Founder Travers J. Bell Jr. failed to cultivate a successor, and when he died in 1988, at the age of 46, his 24-year-old son Darryl Bell inherited the firm. (Darryl's prior claim to fame was playing the role of Ron Johnson on the sitcom It's A Different World.)

The young Bell was inexperienced in the world o f finance and business, and his freewheeling ways erupted into a crazed spending spree of the company's assets. By 1993, Daniels & Bell, which once traded in municipal underwritings worth billions of dollars, was insolvent. The courts ruled that the firm and its properties be sold to fulfill creditor obligations. Tragically, a black Wall Street institution came tumbling down.

All too often, business owners fail to plan how their business will be run after their death. Consumed with day-to-day affairs, they rarely focus on preparing the company for when they're gone. Yet it's critical to plan in advance. F. Douglas Lofton, a principal of the Benicia, California-based law firm of Lofton & Lofton, says, "Once you have started a business, you have an asset and that's when the planning process should begin."

Sucecssor Management. Estate planning is used to minimize a company's tax consequences and to help an entrepreneur prepare for the continuation of the business in case of death or physical or mental incapacity. James Larry Frazier, principal of his namesake firm in Washington, D.C., points out five key factors you need to examine when planning your estate:

* Decide who should take over the business. Will it be a family member or an outsider? Lofton adds to Frazier's advice by emphasizing the importance of picking a successor who is "responsible, competent and trustworthy."

* Your business may not be properly run when you are gone, so have a plan to sell or dissolve it.

* Build a second estate as a cushion. It can include profit-sharing and stock bonus plans.

* Buy life insurance. If creditors come calling, your executor can use the plan to pay debts.

* Build a business fund reserve. In the case of death or incapacitation, it can be used to keep the business afloat.

Transition Stage. A big problem is determining your business' value. First find out if there will be a market for your company, then decide how to turn it into an appealing public offering.

Don't forget administrative expenses. There are federal taxes, state taxes and, yes, even death taxes. A credit of $192,800 is applied to estates of up to $600,000. Principal business owners who exceed that ceiling are hit with a combined estate and gift tax of 37%-55%.

Liquidation Sale. Another crucial area is the liquidity of the concern. For small businesses in particular, everything tends to be tied into the company. Often, the executor will not know the value of the business, how to sell it or even how to make it attractive to an outside buyer.

By selling interest in your business to raise money, you can increase its liquidity. "If you have common stock, maybe it's time to have preferred stock," suggests Frazier, stressing the importance of recapitalizing and restructuring businesses for estate planning.

Life Insurance. The key benefit to life insurance is that it provides liquidity. Although life insurance avoids probate, its value can be counted for state taxes. One way to minimize taxes, suggests Lofton, is to set up a life insurance trust. "It is irrevocable and can be paid out, but the value of the policy cannot be set up against the estate." Another benefit is that you can pay off creditors without having to sell off your business or its assets by naming the business trust as the beneficiary. If there are any creditors to pay off, money is available.

For assistance on estate planning, contact your attorney, financial advisor or the National Association of Estate Planners and Counsels (610-526-1389). You can also access Net Marquee Family Business NetCenter (http://nmq.com) via the Internet.