Trusts and Annuities

The USM Foundation offers charitable gift annuities at rates suggested by the American Council on Gift Annuities.  A charitable gift annuity is a contractual agreement between one or two donors (typically husband and wife) and the USM Foundation. The donor(s) transfers assets as a gift to the USM Foundation and in return, the USM Foundation promises to pay a fixed annuity to one or two annuitants, of the donor(s)’ choosing, for the life the donor(s). The charitable tax deduction to the donor(s) is roughly equal to the face value of the gift less the anticipated liability to the annuitant(s).

Upon the death of the donor(s) the residuum of the annuity is transferred to the operating or endowed account designated by the donor(s). Occasionally a donor may outlive his or her life expectancy and deplete the original gift entirely. Because gift annuities are backed by the full faith and credit of the USM Foundation, annuity payments will continue in these cases and will be funded from the USM Foundation’s reserve funds.

The USM Foundation also offers charitable gift annuities for the benefit of certain other foundations affiliated with the USM or community colleges.  In those cases, the residuum is transferred to the respective foundation upon the death of the annuitant(s).

The USM Foundation will act as trustee for charitable remainder trusts established by donors where the USM Foundation is the 100% irrevocable beneficiary. These trusts are similar to gift annuities in that the donor or an income beneficiary of the donor’s choosing receives payments from the trust for life or a fixed term. The charitable tax deduction is roughly equal to the face value of the trust at inception less the anticipated liability of the trust to the income beneficiary.

There are some fundamental differences between a charitable remainder trust and a gift annuity. A trust is an independent entity with its own tax-exempt status. As such the trust and not the USM Foundation, is responsible to make payments to the income beneficiary, and if the trust becomes depleted there is no obligation on the part of the USM Foundation to continue payments. The payout rate of the trust, which can be a fixed amount based on the initial trust value or a variable amount based on the market value of the trust, is established by the donor within certain parameters dictated by the Internal Revenue Code.

Upon termination of the trust, the USM Foundation, as the remainder beneficiary of the trust, transfers the funds remaining in the trust to the operating or endowed account designated by the donor(s).

The legal documents associated with both charitable gift annuities and charitable remainder trusts are coordinated through the Vice President of Finance. Questions regarding the establishment of or administration of gift annuities and charitable remainder trusts should be initially directed to the USM Foundation Client Relations Specialist.

The USM Foundation should be notified promptly by the campus development offices in the event of the death of an annuitant or income beneficiary. 

TAX FORMS

The USM Foundation Business Office will assist the donor in submitting the required SS-4 Form, the Application for Employer Identification Number, to the IRS for all trusts established. 

1099 Tax Forms are prepared annually by the USM Foundation and sent to each annuitant. 

Tax Returns for all Trusts administered by the USM Foundation are prepared for each donor by USM Foundation accountants. 

 

Our Vision

Our vision is to attract broad resources that transform the USM and its institutions, create a network of advocates to embrace the USM’s role as an educator and economic engine, and to grow a long-term, sustainable culture of philanthropy across the University System of Maryland.

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