Engaging Your Family in Philanthropy

For more information about planned giving opportunities,contact William Mitchell’s Development Office.

Office of Development and Alumni Relations875 Summit AvenueSt. Paul, MN 55105(651) 290-6370 • 1-888-WMCL-LAWE-mail: mruzek@wmitchell.eduWeb site: www.wmitchell.edu/alumni

recycled paper

umerous financial courses andtextbooks exist, but how many ofthose courses focus on financial

values? Where do we learn financial values?How do we learn about stewardship andfinancial responsibility? Although weunderstand the values that build character,such as generosity, honesty, and integrity, howcan we share what we have learned and passthose values on to our loved ones?

Fortunately, values can easily be passedfrom one generation to the next by involvingyour family in your philanthropic plans. Inaddition to spending time with one another,family philanthropy is a great way to shareyour values and allow your children (and theirchildren) to learn firsthand what is importantto you. Family philanthropy can includeanything from volunteering as a family togiving money as a family.

Begin by sharing with your family why yougive to a particular organization and how youdetermine the amount it will receive. Be sureto share the positive feelings and inspirationthat comes from helping others. Once yourfamily has been introduced to your charitablevalues, ask them to participate in the decision-making process. Decide as a family whichcharitable projects should be supported in thefuture. Perhaps your family will decide tomake a gift in honor of a loved one who haspassed. Or maybe your family wishes to funda specific project or annual event. Regardlessof the type of gift, including your family inphilanthropy will naturally bring yourfinancial, character, and charitable values tothe forefront—values that may be passed onto future generations.

N

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. Click on “Alumni” in the left-hand column,

then on “Make a Gift.” Then click on “Planned Gifts.”

Building a Legacya financial and charitable newsletter • spring 2006

ome years ago Margaret Leary ’73named William Mitchell as thebeneficiary of her retirement plan

assets. She didn’t stop there. More recentlyLeary created The Margaret A. LearyScholarship with a combined gift of cashand appreciated stock. Not only will herendowed scholarship leave a legacy for thebenefit of William Mitchell students in thefuture—it is helping students now. Thefirst scholarship was awarded this year tothird-year student Laura Beito.

Alumna Margaret Leary ’73“I could not have attended law schoolwithout working full time, and that waspossible at William Mitchell because of itsflexibility,” says Leary, director of theUniversity of Michigan Law Library. “Forothers, the chance to schedule schoolaround child care, work, and otherresponsibilities is essential. Mitchell’sschedule allows students to use theresource of time effectively. I wanted tohelp with the other resource—money—because my career would not have beenpossible without my legal education. Moreimportant, I also wanted to help ensureentry to the legal profession for all whohave the talent to do well. As law schoolbecomes more expensive, the professionmust ensure entry for all talented people,not just those who are talented and canafford it.”

Giving Students Options—Giving to William MitchellScholarships allow students flexibility

What is her advice for other alumni?“Don’t wait too long to create a plannedgift—if you have seen great appreciation, you don’t have to wait to see how much more there will be—take advantage and let the college benefit.”

Student Laura Beito“I wanted to be able to go to law school fulltime, so I knew I would have limited hoursavailable to work. Receiving The Margaret A. Leary Scholarship lessened my financialburden and played a part in allowing me tocontinue going to school full time and stillhave the chance to volunteer,” says third-yearstudent Laura Beito. Beito was able to use hertime outside of class to volunteer for theMinnesota Aids Project and the ChrysalisCenter for Women. She will graduate in May and plans to work in family law.

SInside this issue:

• Preserving

Retirement

Assets for Life

• Engaging Your

Family in

Philanthropy

Margaret Leary ’73 “wanted to help ensure entry to the legal profession for all who have thetalent to do well…not just those who are talented and can afford it.”

Margaret Leary ’73

Laura Beito

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.

f you are like many people planningfor retirement, you’ve been buildinga retirement nest egg in the form of

a qualified retirement plan. You probablyintend to preserve those funds for yourlifetime, withdrawing as little as possible andconserving the rest “just in case.” You feelsecure in the knowledge that your well-thought-out financial plan is in place. Butwhat happens to your retirement assets after you are gone?

In many cases, they are subject to bothincome taxes and estate taxes. Upon yourdeath, the remainder of your qualifiedretirement plan generally will be included

IPreserving Retirement Assets for Life

in your gross estate for federal taxationpurposes. For large estates, this tax rate is ashigh as 46 percent. If left to your heirs, thefunds are considered “income in respect of a decedent,” and income taxes will be due atdistribution. (Your spouse may roll anyinherited amounts into his or her individualretirement account and delay taxation.)Nearly 65 percent of your retirement assetsmay go to the government, not your heirs.See the chart [below] for an illustration.

Many people, including Luella and DonaldZibell ’62, found that much of their hard-earned retirement assets would end up goingto pay taxes rather than benefiting their

$100,000 IRA Gift to Heirs Versus William Mitchell College of Law

Type of Gift

Beneficiary

Federal Estate Tax(Assumed 46 Percent Marginal Estate Tax Bracket)

Net Amount Subject to Federal Income Tax

Federal Income Tax(Assumed 28 Percent Marginal Tax Bracket)

Net to IRA Beneficiary

Amount to the IRS in Taxes

$100,000 IRA

Heirs

($46,000)

$54,000

($15,120)

$38,880

$61,120 (61%)

$100,000 IRA

William Mitchell College of Law

$0

$0

$0

$100,000

$0

Nearly 65 percent

of your retirement

assets may go to

the government,

not your heirs.

© 2006 William Mitchell College of Law and The Stelter Company

The Secret toMaximizing YourTax AdvantagesLearn how the latest tax

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family or one of their favorite charities, likeWilliam Mitchell. Don, being a CPA and anavid investor, has kept abreast of the variousestate planning and charitable givingtechniques. Both Luella and Don have a widerange of charitable interests and as one oftheir legacies they wanted to help futureWilliam Mitchell students by endowing theZibell Family Scholarship Fund. When askedwhy, Don explained, “student loans these daysare quite a burden. I was able to get throughlaw school without any loans. First you makesure your family is taken care of, then youhave a responsibility to give back.”

Acting on his desire to give back, Donfound two advantages to an IRA gift over hisprevious bequest gift. First, he was able tomake a significant gift to the college byestablishing an endowed scholarship. Second,he helped his heirs avoid steep income taxeson their distribution from his IRA. Althoughsome time has passed since Don changed hisgift designation for William Mitchell from hiswill to his IRA, he still thinks it was a smartdecision. Don has enjoyed watching hisinvestment for the college grow. On a recentvisit, he delighted in sharing that “it’s up 50 percent” from when he designated the gift.

Like Don, you may benefit from creativeestate planning. Many taxes can be avoided by using qualified retirement assets to fundcharitable gifts. These gifts are not at theexpense of your heirs; it is Uncle Sam who isdisinherited! Consider the following optionsto discuss with your estate planning attorney.

■ Name William Mitchell College of Lawas the beneficiary of your qualified planaccount. Your estate will get a charitablededuction for the entire amount, and noincome taxes will be triggered becausethe beneficiary is a tax-exempt entity.

■ Use the annual distributions from yourplan to fund a charitable gift annuity.You’ll get fixed annual payments fromthe gift annuity, and your charitablededuction will help to offset the taxableincome from the annual distribution.

■ Create and then name a tax-exemptcharitable remainder trust as thebeneficiary of the retirement plan. Afteryour death, the trust can pay income toyour heirs during their lifetimes or for acertain period of years. Income taxes willbe spread over this period, providingmuch greater tax deferral than wouldotherwise be available. The remainderthen is distributed to William Mitchelland any other charitable organizationsnamed as beneficiaries of the trust.

Donald ’62 and Luella Zibell

Office of Development and Alumni Relations875 Summit AvenueSt. Paul, MN 55105

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

Web site: www.wmitchell.edu/alumni

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