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Policy: Acceptance of Bequests and University Life Income Plans 


Date: 09/13/13 Policy ID: EXT-007 Status: Final

Policy Type: University
   
Contact Office: University Advancement (Office of)
   
Oversight Executive: Senior Vice President for University Advancement
   
Applies To: Academic Division, the Medical Center, the College at Wise, and University-related foundations.
   
Table of Contents: 

Policy Statement

   
Reason for Policy: Bequests made by alumni, friends, and parents play a vital role in sustaining the University's strength and building areas of excellence. Due to the complexities of life income plans and bequests, Gift Planning within the Office of University Advancement is the authority and agent for establishing and administering life income plans.
   
Policy Summary: 
   
Definition of Terms in Statement: 

Bequest: Property given to the University by will, revocable living trust, or other testamentary instrument.  A bequest indicates that the University is designated as a beneficiary of a will or revocable living trust, retirement plan, life insurance policy, or other revocable gift / interest.  

Gift: Pledges or outright contributions received from private sources for which no goods or services are expected, implied or forthcoming to the donor, and in which no proprietary interests are to be retained by the donor. (Refers exclusively to private gifts, even though such gifts may be termed “grants” by corporations and foundations. For more information, see policy FIN-001, Determining if an Award is a Gift or Sponsored Project.)

Life Income Plan or Gift: Refers to either a charitable remainder trust or charitable gift annuity:

Charitable remainder trusts: Established when a donor makes a gift to a legal entity (trust) with certain conditions. Payments are made to the donor and/or other income beneficiaries in accordance with the trust terms. When the trust terminates, the remaining assets in the trust are directed to charitable uses. The “Rector and Visitors of the University” may serve as trustee of charitable remainder trusts. Charitable remainder trusts may also be created outside the auspices of the University with an independent trustee. Remainder assets from external trusts may also be designated to benefit the University (including schools or units) or related foundations.

Charitable gift annuity contracts: Created in exchange for a gift of cash or securities.  The Office of Gift Planning, through the University of Virginia Foundation, administers a gift annuity program. All gift annuity assets are invested while the annuity is active. Distribution of those assets to University-related purposes is made at the death of the survivor beneficiary. The annuitant (one or more) receives a payment stream that is guaranteed for the annuitant’s lifetime, based upon the initial value of the gift and the age of the income beneficiaries.

   
Policy Statement: 

The Office of Gift Planning is the University’s channel for establishing all internal life income gifts, and supports and collaborates with all units, departments, schools and University-related foundations to create and manage such activity. The Office of Gift Planning coordinates the administration, follow-up, and donor relations of charitable remainder trusts and charitable gift annuities on behalf of the Rector and Visitors of the University.  

All notifications of bequests where the University is named as beneficiary shall be directed to the Office of Gift Planning for administration and follow-up. When a bequest is received by any school, department, unit, Center, or related foundation, the Office of Gift Planning must be notified for recording purposes and may serve that entity in managing the receipt of any designated assets.

Due to the complexities inherent to life income plans, all recommendations to prospective donors regarding life income gifts shall be done in conjunction with and approval of a Gift Planning Officer. All inquiries for information regarding life income gifts should be coordinated with the Office of Gift Planning.

Unrestricted lifetime gifts permit flexibility and use of funds at the University, but other gifts, such as bequests restricted to create endowed funds, should be established with a contingency clause permitting the University to use the funds in a manner which will most nearly satisfy the wishes of the donor in the event that the original purpose can no longer be achieved.

To address the requirement that principal amounts of deferred gifts meet minimum University required funding for named endowments at the time the gifts are realized for use by the University, the Office of the Senior Vice President for University Advancement, and the Office of Gift Planning, will assist in the creation of endowment agreements and will include language in such agreements that addresses inadequate funding and contingency use. (For more information, see the Standard Gift Agreement.) Should the amount of the lifetime gift or bequest be insufficient to satisfy the minimum requirements for the establishment of a named endowment as determined by the Board of Visitors, the principal of the life income gift or bequest shall be merged with an already existing endowment fund whose purpose most closely represents the desires of the donor.

The Office of Gift Planning will coordinate the terms and conditions creating life income gifts as applicable. Upon establishment, income will be paid according to the terms and conditions agreed to in the gift document. 

At the termination of each life income contract, all residual assets will be liquidated and funds will be transferred to the beneficiary entity as described in the individual contract document or corresponding supporting documents. Any questions related to life income gifts should be directed to the Office of Gift Planning.
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Procedures: 

Charitable Remainder Trust procedures [link to be added]

   
Related Information: 

FIN-001, Determining if an Award is a Gift or Sponsored Project
FIN-015, Endowment and Capital Gift Agreements

   
Policy Background: 
   
Major Category: External Relations
   
Category Cross Reference: 
   
   
Process: 
   
Next Scheduled Review: 09/13/16
   
Approved By, Date: Policy Review Committee, 09/13/13
   
Revision History: 
   
Supersedes (previous policy):  IX.A.7, Bequests and University Life Income Plans