Building a Legacy a financial and charitable newsletter
• fall 2005
CD Rates Got You Down? Charitable Gift Annuities Offer High Returns Without High Risk
“The charitable gift annuity allowed us to accomplish our goals; we were able to make a substantial gift to the college and receive annuity payments for the rest of our lives.” —Chief Justice Douglas Amdahl
o you want a dependable return on your savings? Maybe you’ve been investing in certificates of deposit, hoping for the best interest rates. Rates for CDs, however, have been like a roller coaster. The past two decades have seen the rates skyrocket to all-time highs and plummet to new lows. Consider a better option: Create a charitable gift annuity with William Mitchell College of Law. We’ll pay you an attractive rate of return that never changes— an annual fixed amount for life. What’s more, you’ll receive a tax-saving charitable deduction when you itemize on your tax return, and you’ll gain the satisfaction of knowing your generous gift will help meet William Mitchell’s needs. Many people planning for retirement find charitable gift annuities an attractive option. William Mitchell alumnus Minnesota Supreme Court Chief Justice
Douglas Amdahl ’51 and his wife, Phyllis, included a charitable gift annuity in their retirement plans. Amdahl explains, “We wanted to do something to support William Mitchell but also wanted to make sure we had enough income during retirement. The charitable gift annuity allowed us to accomplish our goals; we were able to make a substantial gift to the college and receive annuity payments for the rest of our lives. It’s a win-win for everyone.” The amount you donate is up to you. The rate of return you’ll receive is determined by your age at the time of your gift. The older you are, the higher the rate you’ll secure when the contract is signed. Example: Ruth, aged 70, transfers $10,000 to us. She’ll receive a fixed rate of 6.5 percent, with annual payments of $650. She’s entitled to an income tax charitable deduction of $3,777.* In her 25 percent tax bracket, her tax savings will be $944. And part of each payment will be tax-free throughout Ruth’s life expectancy. To discover your benefits without obligation, call Marie Ruzek, Director of Gift Planning, at (651) 290-6412. She’ll figure your fixed payment and estimated tax savings. *Assuming quarterly payments and a 4.6 percent charitable midterm federal rate, which changes monthly
Chief Justice Douglas Amdahl ‘51
New But Familiar Face Now Directing Planned Giving Efforts
W Marie Ruzek, J.D.
e would like to welcome Marie Ruzek, J.D., who recently joined our Development and Alumni Relations Office. Ruzek is a 2001 graduate of William Mitchell and comes to us with experience in academic and nonprofit fundraising. In addition to directing our planned giving efforts, Ruzek will provide leadership for our academic fundraising priorities, including the clinic, skills, and public service programs, and the intellectual property program. “I am very excited to be back at William Mitchell; I love working with our alumni and friends,” said Ruzek about her new role. Please contact Ruzek with any planned giving questions or to set up a confidential appointment to discuss your future and ours. She can be reached at (651) 290-6412 or firstname.lastname@example.org.
Appreciated Property Cash in on its value with a charitable donation If you own stock or mutual fund shares that have increased in value, you will owe tax on the capital gain when you sell them. There is a way, however, to avoid the capital gains tax and help charitable organizations, like William Mitchell, at the same time. If you donate appreciated securities that you’ve held long term (for more than one year) to a qualified charitable organization, you completely avoid the capital gains tax. Nonprofit organizations, like
Appreciated Property Donate Cash Amount of gift Income tax savings (in a 40% combined federal and state tax bracket)
William Mitchell College of Law, can sell the securities tax free while providing you with a charitable deduction on your income taxes for the full fair market value of the asset. The accompanying chart illustrates the effectiveness of donating stock directly to us. If you are considering making a donation of securities, please call us for specific instructions about the easiest way to accomplish the transfer.
Sell Securities; Donate Cash
Donate Securities Directly
Federal capital gains tax due, assuming a cost basis of $2,000 (15%)
Federal capital gains tax avoided, assuming a cost basis of $2,000 (15%)
Total tax savings
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 rates at 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.
Unleash the Power of Your Vision
eople of vision have long been recognized for their ability to create opportunities for themselves and for others. In his book First Things First, author Stephen Covey describes vision as “the ability to see beyond our present reality, to create, to invent what does not yet exist, to become what we not yet are.” Supporting an endowment is a practical way to extend your vision far into the future. You don’t have to be a Mellon, Ford, or Carnegie to leave a legacy. You can contribute to an existing endowment, or—usually by making a significant gift—you can establish a new endowment for a particular program or project. Endowments are often created in memory of a person that has had great influence. You can also create endowments in your name or that of your family.
Create Your Own Legacy You can create your own legacy by endowing a scholarship or favorite program or project. This could be the most farsighted and enduring act of your lifetime, recognized for years to come. What is an endowment? It’s simply the donation of funds to a nonprofit organization, such as William Mitchell College of Law, to provide an ongoing source of income for the care or financing of a concern that’s close to your heart and reflects your values.
a student who has shown outstanding potential in an area that you feel deserves strong encouragement.
Making It Happen An endowment is a special type of fund that is invested to earn income each year. Like a bank account, as the principal grows, so does the income. A fixed percentage of the income is spent each year to support the endowment’s purpose. This allows the fund to remain intact in perpetuity. When you make a gift to an endowment fund, it can either be outright or deferred (such as through a bequest in a will). Either way, your one gift can turn into a legacy of annual gifts long into the future. You should seek advice from your attorney and William Mitchell’s Development staff to make sure your gift will accomplish your intended goals. Though you may not seek recognition for your generosity, William Mitchell welcomes the chance to show our appreciation.
endowment is a practical way to extend your vision far into the future.
The Charitable Gift Annuity: A Simple Gift That Benefits You, Too
Give a Gift That Pays You Back Learn more about how you can benefit with secure payments for life by making a gift to William Mitchell College of Law. Complete and return the enclosed reply
What Do You Want to Endow?
card to receive our FREE brochure, The
Perhaps you fondly remember your experience with William Mitchell Law Review, a clinic, or an outstanding professor. Maybe you have another capstone experience or academic program in mind and want to ensure the future of that particular program or project by taking the initiative to fund it. Or, perhaps you would like to see an annual scholarship awarded by you or your family to
Charitable Gift Annuity: A Simple
© 2005 William Mitchell College of Law and The Stelter Company
Gift That Benefits You, Too.
Office of Development and Alumni Relations 875 Summit Avenue St. Paul, MN 55105 (651) 290-6370 • 1-888-WMCL-LAW E-mail: email@example.com Web site: www.wmitchell.edu/alumni
Deferred Annuity Can Boost Retirement Funds
re you in a financial position to support the William Mitchell College of Law now but would like to postpone a stream of annuity payments until your later years? The deferred charitable gift annuity accomplishes both. With a deferred charitable gift annuity, you can help support William Mitchell and delay your annuity payments until you need them in your retirement years. By using the deferred gift approach, you can make a significant gift to us now and benefit from the charitable tax deduction that accompanies the gift in the year you make the donation. That may help your current tax situation. Yet, through the deferred arrangement you have also assured yourself of a steady, fixed payment schedule for years from now. This works well for people nearing retirement in a higher tax bracket, where a
large deduction now is welcome, but retirement income is not yet necessary. You can even arrange for a survivor to receive payments once you are gone. Married couples find this especially advantageous. Generally, the older you are and the longer the deferral period, the higher the fixed annual rate of payments. (Refer to the accompanying table.) A deferred gift annuity promises fixed and attractive payments during retirement with no investment worries or responsibilities. It also enables you to make a special and enduring gift to strengthen the college’s mission while you have adequate earnings to redirect toward a gift. Marie Ruzek in our planned giving office will gladly review the specific financial benefits you can enjoy from a deferred charitable gift annuity.
Deferred annuities work well for people nearing retirement in a higher tax bracket, where a large deduction now is welcome, but retirement income is not
One-Life Deferred Gift Annuity Schedule Begin Age/ Payment Age 50/55 50/60 50/65 50/70
Annuity Rate 6.9% 9.2% 12.3% 17.0%
Term to First Payment 5-year 10-year 15-year 20-year
For more information about planned giving opportunities, contact William Mitchell’s Development Office. Office of Development and Alumni Relations 875 Summit Avenue St. Paul, MN 55105 (651) 290-6370 • 1-888-WMCL-LAW E-mail: firstname.lastname@example.org Web site: www.wmitchell.edu/alumni