Building a Legacya financial and charitable newsletter • winter 2006

re you under the impressionthat it takes tremendous wealthto establish an endowed fund in

your name? In reality, that’s not the case.You can leverage your individual retirementaccount (IRA) assets to create your legacyat William Mitchell—a strategic financialmove that allows you to maintain yourcurrent standard of living, preserveinheritable assets, and provideopportunities for future law students.

In a nutshell, charitable gifts from anIRA are nontaxable. The assets can betransferred directly from your IRA to anendowed fund after your lifetime. Currently,when an estate is large enough to be taxed,children who inherit an IRA pay bothincome tax and estate tax. A charitable gift eliminates that double taxation.

The Welter StoryAfter growing up on a Minnesota farm,getting a college degree in chemistry, andserving in the U.S. Navy, Paul Welter wentto work teaching in the Honeywell salesschool. Shortly thereafter he was persuadedby a buddy studying at William Mitchell toenroll here at night. Paul graduated in1964, and in 1965 he married Phyllis andjoined the law firm of Merchant & Gould,where he found the vocation he loved. Hespent 40 years there, eventually serving aspresident, member of the board ofdirectors, and managing director.

Establishing an IRA-Based Legacy With Sense and Sensibility:The Welter Intellectual Property Endowed Scholarship

Paul was regularly listed in Best Lawyers in America for his work as an intellectualproperty lawyer and was dubbed a “SuperLawyer” in the Minnesota Journal of Law and Politics. He built a reputation amongcolleagues, clients and the legal communityfor unwavering integrity and was active incommunity organizations, including theUnited Way and the Legal Aid Society.

Phyllis, who had an M.B.A. when theymarried and worked in the consumer surveydepartment at General Mills, took time off to raise their two children. Once the youngerchild was in first grade, Phyllis, too, decidedto attend William Mitchell at night. As shejokes, “I had to go to law school. It was theonly way I could keep up with Paul!” Phyllisalso became fascinated with trademark lawand eventually started her own company,Survey Counsel, Inc.

In addition to shared professional interests,Paul and Phyllis kept things in balance with

AInside this issue:

• New Tax-Saving

Opportunity for

Donors Aged

701⁄2 or Older

• Give William

Mitchell the Gift

You Always

Intended

Charitable gifts from an IRA are nontaxable. The assets can be transferred directly from your IRA to an endowed fund after your lifetime.

Continued on Page 2

Paul and Phyllis Welter

The information in this publication is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are based on current ratesat the time of printing and are subject to change. References to estate and income tax include federal taxes only; individual state taxes may further impact results.

family time at their cabin and travel. Their last yearstogether were shadowed by Paul’s struggle with cancer,but a highlight of his life during that difficult time wasthe invitation to join the board of trustees of WilliamMitchell, which Phyllis said “kept him going.”

After making a generous gift to the Capital Campaign,Paul and Phyllis decided to set up an IRA gift. They didthe paperwork in 2004 while Paul was still alive. Initially,their intention was to make a deferred gift from theirestate, with proceeds going to the endowed scholarship.But after Paul passed away, some months after their 40thwedding anniversary, Phyllis decided she did not want todefer the gift. She rolled over Paul’s IRA into her nameand made the gift immediately.

Establishing an IRA-Based Legacy With Sense and Sensibility

“There’s a certain satisfaction to doing it now andhonoring him,” Phyllis says. “But the credit goes to Paul.It was his idea to establish the scholarship. He had towork and could not have gone to law school if it hadn’tbeen for William Mitchell. Although I needed to attendschool at night, too, our gift resulted from his passion for William Mitchell and my passion for him.”

Merchant & Gould also continues to honor Paul’smemory through the Paul A. Welter Award forExcellence in Trademark Law. Beginning in 2007,William Mitchell will co-sponsor the award that willhonor outstanding in-house trademark counsel at acorporation.

Continued from Page 1

New Tax-Saving Opportunity for Donors Aged 701⁄2 or Older

n Aug. 17, 2006, President Bushsigned into law new tax incentivesfor charitable gifts from donorswho are 701⁄2 or older. The Pension

Protection Act of 2006 encourages financialsupport of the good work done by charitableorganizations across the United States.

Under the new law, you can make a lifetimegift using funds from an IRA without anyundesirable tax effects. Prior to the new law,you would have had to report any amounttaken from your IRA as taxable income. Youcould then taken a charitable deduction forthe gift, but only up to 50 percent of youradjusted gross income.

Fortunately, now these IRA gifts can beaccomplished simply and without taxcomplications. Plus, you can make the giftnow—while you are living and able to witnessthe benefits of your generosity.

You may contribute funds in this manner if:• You are age 701⁄2 or older.• The gift is not more than $100,000

per year.

• You make the gift on or before Dec. 31, 2007.

• You transfer funds directly from an IRAor Rollover IRA.

• You make the gift to a public charity.(This excludes gifts made to charitabletrusts, donor advised funds, andsupporting organizations.)

How the New Law WorksPat, aged 80, has $450,000 in an IRA andmade a pledge to give $75,000 to us this year.If Pat transfers $75,000 from the IRA directlyto us to satisfy the pledge, she will avoidpaying income tax on $75,000. At the sametime, however, Pat will not be able to use thatgift as a charitable deduction—it is a pure“wash.” It is an easy and convenient way forher to benefit us without tax complications.

How to Make a GiftSimply contact your IRA custodian for theforms necessary to transfer your desired giftto the charitable organization of your choice.

O

© William Mitchell College of Law and The Stelter Company

The Secret toMaximizing YourTax AdvantagesLearn how the Pension

Protection Act of 2006

makes it easier to make

charitable gifts from your

IRA now and in the future.

Request your FREE copy

of Charitable Gifts

From Your IRA using

the enclosed reply card.

Questions and AnswersQ: I receive minimum distributions eachyear from my IRA. Can I use those fundsas a gift under the law?A: Yes. Contact your IRA custodian andadvise them of your desires.

Q: I’ve already named a charitableorganization as the beneficiary of my IRA.What are the benefits if I make a gift nowinstead of from my estate?A: If you have already named a charitableorganization as a beneficiary of your IRA, youare familiar with the double taxation your heirsface if they inherit it. The IRA is subject toestate taxes and whoever inherits the accountmust pay income taxes on the proceeds. Bynaming a charitable organization as thebeneficiary, both taxes are eliminated.

By making a lifetime gift of up to $100,000per year from your IRA, you can see yourphilanthropic dollars at work. You are jump-starting the legacy you would like to leaveand giving yourself the joy of watching yourphilanthropy take shape.

Q: I’m turning age 701⁄2 in a few months.Can I make this gift now?A: No. The legislation requires you to reachage 701⁄2 by the date you make the gift.

Q: I have several retirement accounts——some are pensions and some are IRAs. Doesit matter which retirement account I use?A: Yes. Under the new legislation, gifts can bemade from IRAs or Rollover IRAs. Pension,profit sharing, and other forms of retirementfunds do not fall under this tax legislation.

Q: Do I need to give my entire IRA to beeligible for the tax break?A: No. You can give any amount under this

provision, as long as it is $100,000 or less per year. If your IRA is valued at more than$100,000, you can transfer a portion of yourIRA to fund a charitable gift.

Q: Can I make a gift to a charitableremainder trust?A: No. You can benefit from the legislationonly if you make a gift directly to a charitableorganization—as an outright gift. Gifts thatprovide payments to you, such as charitableremainder trusts, are not eligible.

Q: I have two organizations I want tosupport. Can I give $100,000 to each?A: Under the law, you can give a maximum of$100,000 each year. For example, you can giveeach charitable organization $50,000 this year,or give one organization $100,000 in 2006and the other organization $100,000 in 2007.

Q: I’d like to give more than $100,000.How can I do that?A: The legislation allows you to make a giftin the 2006 tax year and the 2007 tax year. Soif you make a $100,000 gift each year, you cangive $200,000 over the two-year period. Plus,if your spouse is 701⁄2 or older and has an IRA,he or she can also give up to $200,000 overthe same period.

For More InformationIt is wise to consult with your tax professionalsif you are contemplating a charitable giftunder the new law.

Please feel free to call Marie Ruzek ’01 at (651) 290-6412 with any questions youmay have.

Office of Institutional Advancement875 Summit AvenueSt. Paul, MN 55105

(651) 290-6370 • 1-888-WMCL-LAWE-mail: mruzek@wmitchell.edu

Web site: www.wmitchell.edu/alumni

CChhaarriittaabbllee GGiiffttssFrom Your IRA

Give William Mitchell the Gift You Always Intended

For more information about planned giving opportunities,contact William Mitchell’s Office of Institutional Advancement.

Office of Institutional Advancement875 Summit AvenueSt. Paul, MN 55105(651) 290-6370 • 1-888-WMCL-LAWE-mail: mruzek@wmitchell.eduWeb site: www.wmitchell.edu/alumni

recycled paper

erhaps you have always said thatonce you’re comfortable and secure,

you’d like to help those causes near toyour heart. Only you haven’t yet implementedyour philanthropic plans. Are you one ofthese well-intentioned people? If so, here’sthe easiest way to turn your good intentionsinto action.

A Gift in Your WillYou can make a charitable gift by including a bequest to William Mitchell directly in yourwill or in a codicil to your will. In doing so,you provide a pledge of future support for our mission.

We can help you and your estate planningadvisors develop a plan best suited to satisfyboth family and philanthropic goals. Pleasegive Marie Ruzek ’01 a call at (651) 290-6412.

Sample Bequest LanguageTo expedite your good intentions, here’s arecommended clause for making an outright,unrestricted bequest to us.I give William Mitchell College of Law, 875 Summit Avenue, St. Paul, MN 55105,(_______% of the residual) or (the sum of$__________), to establish the John and JaneDoe Permanently Endowed Fund, to be used byWilliam Mitchell College of Law wherever theneeds and opportunities are greatest.

Should you wish to make a bequest toWilliam Mitchell that is restricted to a specificpurpose, please contact us before you do, sothat we can make sure we are able to meetyour request.

Do you want to leave a legacy for your family, friends, and William Mitchell College of Law?

Learn how to plan for tomorrow at our Web site,

www.wmitchell.edu/alumni.

P