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April, 2011

Blooming Ocotillo  

Blooming Ocotillo

courtesy of Mike Hickey



Family Business

Client Spotlight




. Consequences

. Issues

. Succession Plan Team

. Tax Planning

. Estate Planning



Making the right choices

Client Spotlight


As a child growing up in Pennsylvania, Dan Hannah always had a love of horses and animals.  He had a team of ponies he used to plow neighborhood gardens.  He would go to the saw mill and get a load of sawdust he used to bed down his horses.  By the time he got home, a dozen or more children would be riding on top of the wagon; kids would wait for him to get his weekly load of sawdust just so they could get a ride.  In 1974, Dan and his family moved to Arizona where he had jobs working on ranches and still had his ponies and horses for his own children to ride with all the neighborhood kids.  

In 1997, Dan was able to purchase 39 acres in Round Valley with the Little Colorado River running through it, a big asset when you have animals to water and land to irrigate.  Dan and his wife Shirley have worked hard to get Round Valley Draft Horse Ranch to the point they wanted, including putting in miles of gated pipe.  It not only helps with irrigation, but also saves water and makes their lives easier. 


They have teams of Percheron and Belgium horses, both European draft horses that stand 16 hands high or approximately five feet, three inches measured from where the neck joins the body.  When Dan saw some Haflinger horses, he studied them and decided to add them to the ranch stock.   From Austria, the Haflinger horse is a sorral color with a white blaze in its face, a white main and tail: a beautiful animal.  Half the size of the big draft horses on the ranch, the Haflinger is a gentle family horse and very versatile.  They can be used for trail riding, driving, jumping, roping or just about anything.  


Round Valley Draft Horse Ranch has a few head of beef cattle, two milk cows, a heard of Boar goats (a meat goat), milk goats, chickens, pigs, and a small herd of Miniature horses that do not exceed 34 inches in height measured from the bottom of their manes.  The ranch is self sufficient with its own milk, butter and cottage cheese, as well as raising their own produce and canning it for use in the winter. 


The Hannahs' horses provide many benefits for the towns of Eagar and Springerville, the two towns that make up what is called Round Valley. They use their Haflingers for weddings, funerals and wagon rides.  They do community benefit auctions, estate auctions and auctions to help Future Farmers of America.  They also do auctions to help children and adults who have medical needs, and benefits for different church organizations.  Dan has played Santa Clause for many years for those same groups and the children of the town.  Many school children and church groups come on field trips to see all the animals, watch a cow being milked, the animals being fed or to pet a new-born animal.  Word of mouth has brought one visitor from as far away as England and another from Japan to see their ranch and animals.    


Dan and Shirley's oldest son Blaine likes the beef cattle, using his quarter horse to ride and rope the herd.  Brandon, their youngest son, likes his goats and Miniature horses, training several teams for driving.  As well as maintaining mowing operations and cultivating the gardens, he continues to give rides to different visitors.  He has a collection of Miniature horse-drawn equipment just like Dan's, whose horse-drawn collection consists of farm implements:  mower, cultivator, manure spreader, plow, Harrow; as well as a hay wagon, a bob sled and an Amish buggy.  Shirley says the Fourth of July would not be the same if their boys did not have their horses in the parade.
Viewed as a working ranch, Dan and Shirley believe it takes all of them to keep Round Valley Draft Horse Ranch running, but they love their ranch life.  The ranch is also a member of Arizona Draft Horse and Mule Association which promotes draft horses, an indication of where their hearts and loves lie.  


For more information about hay rides or tours, please contact Dan or Shirley Hannah at
662 W. Airport Rd. Springerville, AZ; telephone 928-333-2253.


RV Draft Horse Ranch.2
Some of the ranch's draft horses



Mike Margrave is president and a member of the board of directors of the American Association of Private Railroad Car Owners, Inc., which is an organization of over 400 members devoted to the preservation, restoration and operation of private railroad cars (see

This year is going to be a particularly busy year as Margrave also has planning responsibility for AAPRCO's 2011 convention in Kansas City, Missouri in mid-October.  In conjunction with the convention, a special private rail car trip will run from New Orleans to Kansas City with 15-18 vintage cars.

In late April, there will be a member and board of directors meeting in New Orleans to review many technical issues and other matters of interest.  There are over 100 cars in the organization that meet AmTrak-required mechanical and safety standards to be fully operational.


According to AAPRCO's website, many private cars can be chartered by individuals or groups for pre-planned or custom rail trips.  Contact Mike Margrave with any questions:




MWM Train



Mike Margrave aboard his rail car,

Promontory Point








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This newsletter is for informational purposes only.  Legal advice is provided only through a formal attorney/client relationship. 

Margrave Celmins, P.C.
8171 E. Indian Bend Rd., #101
Scottsdale, Arizona 85250

This month we feature an article about the family business and what happens when mom and dad are no longer there to run it.

Round Valley Draft Horse Ranch is our client highlighted in this issue.  The Hannahs' horses provide many benefits for their local area, as well as fun for children and adults alike.

We've added Facebook to our social media network.  And new articles are posted on our blogs every couple of weeks that discuss estate planning, personal injury, business law, litigation and real estate issues.  So visit often.  See the links below in "About Our Law Firm" to take you directly to our revised website and links, as well as any of our blogs.

If you want to be alerted to one of our new blogs in any specific area, please sign up on the Twitter link below, and you will receive a notification that you may link to if the subject interests you.

As always, if you see something a friend or business associate might find useful, please feel free to forward this newsletter to them.  And if you have any thoughts to share, please contact our editor Patty Copeland at

Michael Margrave
Margrave Celmins, P.C.


There comes a time when mom and dad recognize or are reminded that serious thought should be devoted to what happens to the family business when they are no longer there to run it-whether by retirement, disability, death or other reasons. Will the business have value after the parents cede control, are the children going to play a role, are there key employees to consider, should the business be sold to a third party, should there be a total or partial lifetime transfer of ownership and control, how are children not active in the business going to be treated as fairly as those active in the business, and what tax implications are involved are just a few of the many questions that need to be considered and answered in dealing with this issue.


Too often, grappling with answers to these and other questions is simply pushed down the road because the subject is not comfortable to deal with, there is uncertainty how to cope with it, there is a mistaken belief that there is no one out there who could possibly replace mom or dad successfully and take over ownership and management of the business, and/or the tax planning opportunities available appear too complex to deal with.


ConsequencesThis failure to plan can lead to some unfortunate consequences down the road that offer the potential for creating negative tax issues, in-fighting among beneficiaries, lack of a qualified person to step in upon the occurrence of a catastrophic event and ultimately even failure of the business to the financial detriment of all. When mom and dad have children, some of whom are active in the business and some of whom are not, the issues can become even more pronounced. Statistics seem to suggest that only about 30% of family businesses pass down to the next generation. 

IssuesHere are just a few issues that can arise in the family context:

1. What type of process for transition of ownership and control is contemplated? Will mom and dad really be able to give up control? There are some people out there that simply don't have in their gene pools the ability to turn over control to their kids or in some cases anyone else.

2. Are some children active in the business and some not? Should the non-active children be excluded from an ownership interest in the business? If they do wind up with an ownership interest, how are non-active children to be precluded from interfering in the running of the business by the active children? How are the short-term and long-term interests of active and inactive children to be reconciled? The inactive kids want a nice annual return. The active kids generally have a longer term view and, of course, want nice salaries and benefits. Do mom and dad have sufficient assets other than the business to ultimately pass along to the inactive children? Many times that is simply not the case.

3. With children active in the business, how will differing abilities and work habits between or among them be taken into account? Treating everyone equally, although they will not likely contribute the same benefit to the business, can lead to future problems.

4. Do mom and dad favor some children over others-to the detriment of a successful succession plan?  There is a changing world with more and more women taking active roles in business. Sometimes, old habits and attitudes are hard to break. What if there is a daughter with greater business acumen than an older son?

5. Are there sibling rivalries that need to be addressed? Are these rivalries in the open now or possibly submerged until mom and dad have passed away?

6. Is the present business structure the right one for the succession plan or does it need to be adjusted or revised now in contemplation of future events?


SuccessionSo how is a family to deal with these issues of succession? The answer is easy to state, but sometimes difficult to accomplish: develop a succession plan.  Generally, a "team approach" is most productive as it is rare that one specific person would have all of the knowledge and experience appropriate to deal with all of the ramifications of family succession planning. Members of this team would likely include at various times during the process the attorney, the accountant, a business succession consultant for complicated situations, the financial planner, the banker, the insurance agent, and a business appraiser. There could be additional advisors in certain circumstances such as a mediator or facilitator if there are numerous family members involved and a business broker in circumstances where a sale to an outside party might be the best alternative.  While this array of people may seem complex to some, it is probably most productive for the business owner, spouse and his or her children in the long term to develop a competent team to assist them through this process in order to maximize the return for the family over the long run.

TaxOften tied to succession planning, and many times in addition to succession planning, are issues pertaining to income, gift and estate tax planning and how proper planning can be utilized to maximize returns for the family. Here, income tax consequences in connection with a lifetime transfer can  turn on the manner in which a sale or transfer is accomplished, whether by sale of assets, sale of the ownership interest in whole or in part, merger transaction or refinancing transaction. And estate tax consequences, although we are still in a year of uncertainty, can be significantly impacted by lifetime giving, the use of certain types of trusts and the use of family limited liability companies or limited partnerships.


EstatePlanGeneral estate planning documents, such as the family revocable trust, should also be adjusted for the uniqueness of the family business. However, mom and dad should be careful that the plan developed for estate and gift tax planning does not unduly complicate a future sale of the business because of the complexities of the estate plan. In light of the recent estate and gift tax changes, lifetime giving will be attractive at least through the end of 2012.

At the end of the day, the family business is a valuable asset that deserves more careful consideration as to what happens to maximize its worth and to successfully pass it downstream, whether to family members, key employees, outsiders or a combination of those people. If any of you will be travelling down this path, please feel free to contact Mike Margrave.

About Our Law Firm 

Margrave Celmins is a member of LawPact, which is an association of independent, business-oriented law firms in the U.S. and overseas.  Currently there are 54 member firms.  This is a terrific resource for clients who have legal matters in other states and abroad.  There are 28 states and 23 countries represented by member firms throughout Europe and in Canada, Mexico, Brazil, Argentina, India, Hong Kong and Australia.


Margrave Celmins, P.C.

8171 E. Indian Bend Rd., #101

Scottsdale, Arizona   85250




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