Westmont Magazine A Way to Save with IRA's
A s an attorney, Gordon Peterson understands the benefits of estate planning. But as a specialist in intellectual property (patents and trademarks), he wasn’t sure which approach would yield the greatest benefits for him and his wife, Pat.
So he listened to lawyers with expertise in the field and discovered he could realize substantial tax savings by designating some of his IRA funds for a non-profit organization.
“When someone decides to make a charitable bequest, they should find out how to do it in the most tax-efficient manner possible,” Gordon notes.
“For us, using IRA assets for that purpose seemed to make a lot of sense. When you give these funds to a qualified charity, your estate pays no tax, and neither does the charity.
“But if you give that same money to your children, both your estate and your children pay tax on it,” he explains. “We avoid paying a lot of tax by naming Westmont as a beneficiary of one of our IRA accounts.”
When Gordon and Pat shared their decision with Iva Hillegas Schatz, Westmont’s director of planned giving, she welcomed them into the Wallace Emerson Society. Anyone who makes a provision for the college in their will or estate becomes a member automatically.
“This type of gift is very beneficial to the donors tax-wise,” Iva says. “When assets such as IRA and retirement benefits pass to children as ‘income in respect to a decedent or IRD,’ they are taxed as ordinary income. If the estate is sizeable enough, they also generate estate taxes with rates as much as 50 percent or more.
“Fortunately, naming a charity as the beneficiary of an IRA is quite easy and requires only a very simple form,” she adds.
The Petersons chose to support Westmont because their son, Erik ’87, had a great experience during his college years.
“He gave his life to water polo as a high school student,” Pat notes. “So when he got to college, the work was challenging. But his professors really cared about him and showed their concern.”
One of the highlights of Erik’s education was traveling in Europe with Professor Roy Millender during the summer International Business Institute. He remains good friends with his college suitemates and meets them in Mexico once a year to go surfing.
Today Erik is a lawyer like his father. He graduated from the law school at the University of San Francisco and stayed on to practice civil litigation in the city. He has also served as a judge pro tem in superior court.
“We have always had such a high regard for Westmont,” Gordon adds. “We felt that a contribution to Christian education was a very worthwhile thing for us to consider.”
They value Westmont’s adherence to its heritage. “While the college has changed over the years and kept up with the times, it has also held strong to its spiritual values,” Pat notes. “It hasn’t lost its Christian emphasis.” She grew up in Santa Barbara and learned about Westmont from youth leaders at her church, who were students.
Gordon turned his attention to estate planning recently because he is phasing out of his Orange County law practice. He and Pat will enjoy their retirement years in their longtime home, San Clemente, Calif., knowing their affairs are in order.
To receive more information about planned gifts to Westmont that provide tax savings and/or lifetime income, please contact Iva Hillegas Schatz, director of planned giving, by e-mail (email@example.com) or by phone at 805/565-6034 or 800/998-5652 ext. 1.