EXT-007: Acceptance of Bequests and University Life Income Plans

Date: 09/13/2013 Status: Final
Last Revised: 03/29/2019
Policy Type: University
Oversight Executive: Vice President for Advancement
Applies To:

Academic Division, the Medical Center, the College at Wise, and University-Associated Organizations.

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.

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. 

  • Gifts:

    Pledges, outright contributions received from private sources, or activities supported by an external party (i.e., donor) in exchange 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.

  • Life Income Plan or Gift:

    Refers to either a charitable remainder trust or charitable gift annuity.

    • Charitable Gift Annuity Contracts:

      Created when a donor makes a gift of cash or marketable securities to the University of Virginia Foundation (UVA Foundation). In exchange for the gift, the UVA Foundation makes fixed payments to one or two annuitants for life based on the initial value of the gift and the age(s) of the annuitant(s). The payments are backed by the full assets of the UVA Foundation. When the contract terminates, the remaining market value of the contract is distributed for one or more University-related purposes. The Office of Gift Planning, through the UVA Foundation, administers the University’s gift annuity program. All gift annuity assets are invested during the annuity contract term.

    • 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 University-Associated Organizations.

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-Associated Organizations 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, orUniversity-Associated Organization, 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.

Compliance with Policy:
Failure to comply with the requirements of this policy may compromise the University’s fundraising efforts and donor relations and may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.

Questions about this policy should be directed to the Office of University Advancement.


Trust Process Checklist
Checklist of Documents Required to Open a Trust Account

Related Information:

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

Major Category: External Relations
Next Scheduled Review: 09/13/2016
Approved by, Date: Policy Review Committee, 09/13/2013
Revision History: University-Related Foundation changed to UAO 5/10/22; Added Compliance section 12/20/22; Updated term "Charitable Gift Annuity Contracts" 3/29/19; Updated term "Gifts" 6/22/18; Added Procedures 10/3/17.
Supersedes (previous policy): IX.A.7, Bequests and University Life Income Plans