35
DECEMBER 2014
ACT
FINANCE
INDUSTRY FOCUS
Lee
and
Terry Resnick
present a case study on how
proactive estate and succession planning can drive a family
business into and beyond the next generation.
C
ranes and rigginghavebeen the
lifebloodof theMayweather
family for twogenerations.
Well respected in the industry, this
familyhasno intentionof ever ceasing
operations. Startingwith two employees
in1966,MayweatherCrane&Rigging*
has 90 employees andannual revenues
that exceed$50million. Theirhardwork
haspaidoff and theMayweathers enjoya
comfortable lifestyle.
RayMayweather, 65, is still intricately
involvedwith the companyandowns 100
percent ofMayweatherCrane&Rigging.
Hiswife, Rachel, phasedout of the
business in1968when theyhad the first
of their three children. Two sons,Nathan
andAdam, are involved in theday-to-day
operations andhaveworked theirwayup
tomanagement levelwith thehopesof
oneday takingover the familybusiness.
Their sisterLauren, althoughvery close to
herbrothers, never showedmuch interest
in the familybusiness, andwhile she still
lives in the same town, is involved ina
careerunrelated to thebusiness.
TheMayweathers are a classic example
of a familybusiness that tooka chance,
worked incrediblyhardandmade their
company successful. It isof theutmost
importance to theMayweathers that
MayweatherCrane&Rigging continues
forNathanandAdamand, if possible,
THEAUTHORS
LEE
and
TERRY
RESNICK
are
partners inResnick
Associates,
an estate,
succession and lif
e insurance advisory
and implementation firm.
This articlewas
adapted f
rom a presentation they gave at
the SC&RAAnnual Conf
erence inApril 2014
.
*
Nameswere changed to protect privacy
futuregenerationsofMayweathers.
Unfortunately,when it comes toa crane
and riggingbusiness, intentions aren’t
whatmakes thesegoals anddreams
happen. Proactive estate and succession
planningare thekeys todrivinga family
business intoandbeyond thenext
generation.Actions speak louder then
intentions, and insufficient or improper
planning, combinedwithhefty federal
estate taxes, speak louder thananything.
Witha twoout of three failure rateof
first generation familybusinessesmaking
it toa secondgeneration, theMayweathers
will find that successfully transferring
theirbusiness to their sonsNathanand
Adam couldbe abig challenge.
MayweatherCrane&Rigging isdoing
well.What challengeswill this family
facewhen it comes to transitioning their
company?
1.DoRayandRachel transfer the
business, one-third each to each child
(althoughonly twoof three are active in
thebusiness)?
2. Inaddition to their company,
Ray’s andRachel’s estate ismadeupof
additional non-business assets. Theyare
facedwitha corresponding federal estate
thatwill bemillionsof dollars (due and
payableninemonths after the second
deathofRayandRachel).
3. There are threekey employees that are
absolutelyvital to theday-to-day success
ofMayweatherCrane&Rigging.What
assurancesdoNathanandAdamhave that
thesekey employeeswill stayonceRay
exits thebusiness?
These are just a fewof thevery common,
yet oftenoverlooked challenges for a
successful crane and rigging company.
If these areas arenot addressed through
quality estate and successionplanning,
then theMayweather familywill be almost
assuredof losing the company.Conversely,
if properplanning is implementedand
reviewedannually, theyhave averygood
chanceof seeing theirbusiness continue
successfully formanymoreyears.
ISSUENUMBER1
:
Fromour experiences,
unless it is averyunique situation,we
generally recommend that only children
that are activelyworking in the company
receivebusiness interests ina familyheld
crane and rigging concern. Typically, the
crane and rigging companyand related
assets comprise70percent ormore
of abusinessowner’s estate. If there is
one childworking in the company that
ultimatelygets a70percent distributionof
the estate assets,without properplanning,
thatmeans if there are threeother children
theywill receive10percent each. Properly
structured life insurance is thekeyasset
in equalizing the inheritance for children
of crane and rigging companyowners.
There isnootherplanning technique
that allows the immediate creationof
wealth. But there’s a caveat: The correct
acquisitionand implementationof life
insurance for estateandbusinessplanning
isoften complexand sophisticated.As
with legal andaccounting/valuationwork,
it is critical that thispart of theplanning is
handledby experienced specialists. There
are countless storiesof businessowners
having life insuranceonly to seepremiums
unexpectedly skyrocket, implosionof
policies, and the like.
ISSUENUMBER2
:
Insufficient liquidity,
when it isneededmost, hasbeena
constant indestroying familybusinesses.
As stated earlier, the federal estate tax,
with current rates at 40percent, isdue
Succession
planning 101
Proper estate and
succession planning
can be the difference
between a company
surviving or not.
>
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