A newsletter from the William Mitchell Institutional Advancement Office
SUMMER 2009
Building a Legacy Giving Back: Appreciation for a Lifetime of Fulfillment
For retired lawyer William (Bill)
Reed ’69 and his wife Bonnie, spending summers hunting, fishing, and enjoying each other’s company at their home on Big Sandy Lake in Northern Minnesota are the rewards for a lifetime of hard work and a successful career. As a young land surveyor with a wife and two small daughters, Bill became fascinated with the legal aspect of surveying and land law. He took a number of night classes at the University of Minnesota on these subjects, then learned of William Mitchell and set up a meeting with Dean Doug Heidenreich. After the meeting, Bill took the LSAT and scored well (he
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I knew long ago that I wanted to give something back.
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You can make a difference for William Mitchell
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A Financial Planning Strategy to Consider: Deferred Charitable Gift Annuity
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Ask the Expert: The Economy and Giving Institutional Advancement William Mitchell College of Law 875 Summit Avenue St. Paul, MN 55105 www.wmitchell.edu/alumni 651-290-6370 email: marie.ruzek@wmitchell.edu Written by Marie Ruzek ‘01, Development Officer
In this issue
Bill ‘69 and Bonnie Reed
jokes that his results must have been mixed up with someone else’s). He was admitted to William Mitchell. Bill lives by the credo, “you get out of life what you put in,” and law school was no exception. “I have great memories of, and appreciation for, the Dean’s assistance,” he says. Mitchell was the logical choice for Bill because he was working full-time and needed to support his family. “And it [Mitchell] had a great reputation,” he says. Upon Bill’s graduation from William Mitchell in 1969, the Reeds moved their family to Denver, where Bill had secured a job as an attorney with a national title insurance company. After just nine months, Bill felt the pull toward private practice and wanted to try lawsuits. He signed on with an insurance defense firm. He liked the trial work and ferreting out facts that helped his client’s case—it reminded him of hunting, a favorite hobby. But the rigorous preparation for trial and increasingly clogged courts meant long hours, which took too much time away from his family and avocations. To balance work, family, and hobbies, Bill accepted the position of chief counsel for
William Mitchell College of Law
You can make a difference for William Mitchell
Our team of development
professionals can help you and your estate planning advisors develop a plan to satisfy both your family and philanthropic goals. Contact: Lisa Barton ’97, 651-290-6357 lisa.barton@wmitchell.edu, or Marie Ruzek ’01, 651-290-6412 marie.ruzek@wmitchell.edu. And if you have not yet included the law school in your plans, there are several ways to become a Mitchell donor: • Cash and pledges • Stock and other securities • Real estate • IRA and retirement assets • Income-producing gifts • Charitable lead trusts • Life insurance • Estate gifts To ensure that we honor your wishes, please call Institutional Advancement at 651-290-6375 if your plans change. A Gift in Your Will An Easy Way to Turn Your Good Intentions into Action Sample Bequest Language I give William Mitchell College of Law, 875 Summit Avenue, St. Paul, MN 55105, (____% of the residue of my estate) or (the sum of $______), to be used wherever the needs and opportunities are greatest. 2
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might have been had I remained Colorado operations for the title a surveyor only, although I could company Transamerica, which have done that and been happy. later bought Commonwealth and Dean Heidenreich and William Lawyers, and had 85 offices in Mitchell made that possible.” the state under his purview. The position allowed him to put his Bill has many fond and surveying and legal experience to humorous memories of his time work settling claims and going to at law school, despite the hard court. The job was such a great work and pressure that come fit for him that he stayed for 25 with the desire to do well. “I years–even past typical retirement enjoyed the study of all aspects age. Then “I decided that I would of the law, and many of the soon be middle-aged and needed associations with my classmates more time to hunt, fly, and get have remained to this day— that lake place I remember them in Minnesota,” all well, as I do the Bill jokes. professors,” Bill says. I feel that “It was as with Air Like many William Mitchell Force buddies— people, you’ve gone through lawyers put has opened many a lot together.” off their doors for me. own estate One professor planning. Bill who is particularly admits that he and Bonnie did memorable is Kyle Montague. not have a will at the time of his “In our orientation class the retirement, deeming Colorado’s first night at William Mitchell, statutory will adequate for their the professor stated that ‘...the purposes at the time. In 2004, law is a jealous mistress’,” Reed when Bill retired, he and his remembers. An avid pilot, Bill wife made creating a trust a and Bonnie fly back and forth to priority, and William Mitchell was Minnesota and Colorado in a T-6 first on their list of charitable “Texan,” an advanced trainer in beneficiaries. World War II and combat plane in the Korean Conflict. The nose “I knew long ago that I wanted art includes part of Professor to give something back,” he Montague’s aphorism, “Jealous says. “I feel that William Mitchell Mistress,” because much like has opened many doors for me, the law, an airplane keeps one expanded my vision from that of occupied. “Retirement, despite a mathematics, physics, objectivehaving very much enjoyed my oriented thinker to being more working career, is the best job I analytical and accepting of ever had,” says Bill. contrary views. This generally made life more interesting than it
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William Mitchell College of Law
A Financial Planning Strategy to Consider: Deferred Charitable Gift Annuity
Charitable gift annuities are a
wonderful way to make a gift to William Mitchell College of Law because they can be tailored to meet your individual financial needs and timetable for receiving regular payments. Traditional charitable gift annuities are contractual gift arrangements; you make a gift to a charitable organization and the organization promises to provide you with regular payments for life. The charitable gift annuity provides you with an immediate fixed payout, as well as a charitable income tax deduction for a portion of the gift and partial avoidance of capital gains taxes if the gift is funded with appreciated securities. Deferred Gift Annuities A deferred charitable gift annuity works like a traditional charitable gift annuity except the payment start date is deferred to a later date you select, at least one year after the gift is made. Many individuals choose age 65, the typical retirement age, to begin to receive payments because they may then be in a lower tax bracket. Deferred gift annuity payments are higher than traditional gift annuity payments because William Mitchell hasn’t had to pay the annuity for a number of years before payments commence, which allows the principal to grow. As with the traditional charitable gift annuity, you receive a charitable income
tax deduction, which is taken in the year the gift is made, not in a future year when you begin to receive the annuity payments. Capital gains taxes are partially avoided if you make your gift with appreciated securities. To supplement retirement income, younger individuals often use deferred gift annuities to defer payments until retirement. Other people, however, like the flexibility that a deferred gift annuity offers. Some like to make a gift to a charitable organization at, for example, age 70, and defer the annuity payments until a few years later, perhaps age 75. When choosing a date to begin to receive payments, keep in mind that the older you are when you receive the payments, the larger your payments will be. How It Works You make the contribution now, securing a current income tax charitable deduction, and William Mitchell agrees to pay you fixed payments for life starting on the date you select. This is beneficial if your tax bracket is higher now than you anticipate it will be later. The William Mitchell Development staff will be glad to run a personal illustration for you showing the specific financial benefits you can enjoy. Contact Marie Ruzek at marie.ruzek@wmitchell.edu or 651-290-6412 to request your personalized illustration today.
Example Carol is age 50. She gives $40,000 to a deferred payment gift annuity, arranging for payments to start when she reaches age 65. She itemizes her income tax deductions, so she’ll be able to deduct $11,362*. Based on then-current rates, she’ll receive $4,480 each year ($1,447 of which is income tax-free) beginning at age 65, a rate of 11.2 percent. *This example is based on quarterly payments and a 3.4 percent charitable midterm federal rate.
© The Stelter Company The information in this publication is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.
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SUMMER 2009
Ask the Expert: The Economy and Giving Written in consultation with Robert (Bob) F. Collins ’65 of Lindquist & Vennum, who specializes in complex estate and charitable planning. Bob can be reached at rcollins@lindquist.com.
Q
I want to continue my gifts to charity, but I’m concerned about retirement and the economy. Is now a good time for me to make a gift? If so, what strategies might I use?
A
with the downturn in the economy and your concerns about retirement, Even now is still a good time to consider including charity in your planning. In fact, some charitable giving strategies may offer you higher returns than conventional banking products right now. Below I’ve outlined a number of tools, ranging from very simple to complex, for you to consider.
1 Gifts of appreciated stock may be a good option. You avoid capital gains tax and receive a tax deduction. Or, if your stocks are under water, sell them, take a capital loss (up to $3,000/year) to offset your income, and gift the sale proceeds.
2 Using individual retirement account
(IRA) assets may make sense for you. It is simple to change your IRA beneficiary designation form to give a percentage of your IRA to charity. Or, you may designate charity as remainder beneficiary of (part or all of) your IRA and if (and to the extent) your spouse decides she does not need the IRA, she may disclaim, in which case the IRA would pass directly to the charitable beneficiary. Beneficiaries other than the surviving spouses or charity are heavily taxed on inherited IRA assets. Also in 2009, if you are 70 ½ or older, you are eligible to make outright gifts totaling up to $100,000 from your qualified IRA directly to charity tax-free.
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3 Including a charitable bequest in your
will is an easy way to make a gift to William Mitchell without affecting money you need for a secure retirement. The following is sample bequest language you may give to your estate planning attorney:
I give William Mitchell College of Law, 875 Summit Avenue, St. Paul, MN 55105 ( % of the residue of my estate) or (the sum of $ ), to be used where the need is greatest.
4 A deferred charitable gift annuity is an
excellent tool to insure enough income during retirement. See the article on page 3 for detailed information.
5 Now is a better time than any other time to set up a charitable lead annuity trust. Because of the historically low interest rates, you can leverage the remainder interest that goes to family. Another strategy to maximize the remainder to family, would be funding the trust with assets that you expect to increase in value. The family would reap the benefit of any gains later realized. For more information on this and other complex estate planning options, consult an attorney experienced in charitable estate planning.