Gift Annuities and Split-Interest Agreements

Gift Annuities

 

The University sometimes enters into gift annuity agreements, committing to pay a donor or his designated beneficiary a specified annuity in exchange for a charitable donation.  The University invests these donations in the Growth Pool, withdrawing funds as needed for annuity payments.  When the annuity expires, usually at death of donor or his designated beneficiary, the balance remaining in the annuity fund benefits the charitable purpose designated by the donor.  To the extent that each annuity’s assets are insufficient to fund annuity payments, the University’s unrestricted assets fund any deficiency. 

 

Charitable Remainder Trusts

 

Similarly, the University sometimes agrees to act as trustee or co-trustee on a charitable remainder trust and enters into a trust agreement with a donor.  The donor agrees to transfer cash or other assets to the University in order to fund the trust in exchange for payments for life or for some other specified term.  Upon termination of the term of the trust, the balance remaining in the trust benefits the charitable purpose designated by the donor.  There are two types of charitable remainder trusts:

  • Charitable remainder annuity trusts – can only be funded once and payments are fixed, based on a percentage of the trust assets at inception.
  • Charitable remainder unitrusts – can be funded multiple times and payments vary, based on a percentage of the trust assets at the beginning of the tax year.

 

Bank of New York Mellon is the administrator for both the University’s gift annuity and charitable trust programs.  However, Bank of New York Mellon is only responsible for investment management of the charitable remainder trusts; gift annuity funds are invested in the University’s Growth Pool.

 

For further details, please Annuity and Life Income Funds (E015) and Office of Estate & Gift Planning website.