RAY GUERRERO — THE BEQUEST OF IRA MAKES A PERFECT CHARITABLE GIFT

Ray and Edie Guerrero

Like many others, Ray and Edie Guerrero started giving in 1994 to St. Jude to express their gratitude for the care given by their physician. Through the years, they have had a long relationship with Dr. Douglas Starr at St. Jude Heritage Medical Group's Diamond Bar office and many positive experiences at the Medical Center.

Then, while trying to figure out an unexpected tax issue with his Individual Retirement Account (IRA), Ray hit on a way they could express the gratitude they felt in a bigger way.

With a long career in engineering, including running his own highly successful engineering consulting firm, Ray gained vast experience analyzing problems and complex situations. So he applied that same problem-solving determination when he reached the age of 70 ½ and was required to take an annual minimum distribution from his IRA.

He found that while the tax-deferred nature of IRAs make excellent retirement planning tools, they aren't favorable estate planning tools because the assets are highly taxed when inherited by heirs.

Like most people, Ray was under the impression that his IRA would provide lifetime income for him and his wife, Edie, and the money would eventually pass to their children. He was shocked to learn that a large portion of the IRA funds would be swallowed up in taxes. After further examination, he learned that IRA assets are not only potentially subject to estate taxes when passed on to heirs, but also to federal and state income taxes.

Ray made it his business to read and attend seminars to learn more about the possibilities of IRAs, and he came to the conclusion that it was wiser to give the remainder of his IRA to a qualified charitable organization. IRA assets that pass to a charitable organization are not subject to transfer or income taxes; and the charity receives the entire amount.

In 1999, he completed a simple beneficiary form making St. Jude Medical Center the beneficiary of his IRA account. That gift made Edie and Ray members of the Sr. Jane Frances Society, a legacy society comprised of donors that include the Medical Center in his or her estate.

When Edie passed away in 2013, Ray took another look at his estate plan and decided that it was practical for a portion of his IRA account to pass to his children and a percentage would still go to St. Jude Medical Center. He did not have to amend his will or living trust, he simply amended the beneficiary form. IRA assets pass outside of a will through beneficiary designation.

It may be a good time to review your estate plan and IRA assets to see if a charitable beneficiary designation fits your family needs and philanthropic desires. If you would like to learn more about this opportunity and obtain our tax identification number, please call St. Jude Memorial Foundation at 714-992-3033.