The family's solution has been to buy massive life insurance policies. They now pay about $335,000 per year in premiums. When Roger dies, the insurance money goes to the company, which will use it to help buy Roger's stock back from his wife, Sherley, who must then use the proceeds to pay the death-tax bill. That should allow the fourth generation of Hannays to keep Hannay Reels.
But there are wildcards. At 64, Roger cannot readily increase his insurance coverage, and the business is growing. As the years go on, he says, the "spread widens" between the value of his insurance and his stock.
The Hannays won't take the easy route and accept one of the unsolicited offers they have received for the company. "Actually, I would be better off," says Hannay. "But we ain't going to do that."
Why not? "If any generation is forced to sell this baby, it won't stay in Westerlo, N.Y., because that's what companies are going to do if they buy it," he says. "They are going to move it. It doesn't make any sense to be here except to us."
New York taxes are too high, and it is too expensive a place to do business for an owner solely focused on the bottom line.
Hannay is wary of sounding "too corny and sappy," but his love for his town is clearly sincere. He recalls his children taking the 13-mile bus ride each way to the local high school, and friends who sold family businesses and regretted it. "Our employees are family to us," he says.
"I want to be clear," he adds. "Not every single resident of this village works in Hannay Reels and vice versa. Some of them commute to Albany and have other jobs (which is a 50-mile roundtrip every day). But a lot of folks from the surrounding hills here … a lot of them, directly or indirectly, depend on us. So do some local businesses that we shop with and are vendors of ours. So, yeah, without being too full of ourselves, I say it would make a big economic impact."
A Congress that maintains the death tax isn't just attacking families like the Hannays, it is also attacking the villages where they live.