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Annuity Program

One of the most common and popular ways to make a planned gift is with a charitable gift annuity. A gift annuity is a simple contract between a donor and the University of Maine System (UMS). In exchange for an irrevocable gift, UMS will agree to pay one or two annuitants a fixed dollar amount each year for life. The yearly amount will be based on life expectancy: the older the donor at the time of the gift, the greater the amount will be.

Charitable gift annuities are very popular for several reasons:

  • They pay a relatively high annuity rate;
  • They require only a minimum contribution of $10,000;
  • They can be funded with cash or securities;
  • The donor can receive an immediate charitable income tax deduction for a portion of the gift;
  • The donor can reduce his/her capital gains tax liability if they use an appreciated asset to fund the annuity;
  • Part of the annuity payments may be tax free, significantly increasing the effective return;
  • Estate taxes are avoided on the asset contributed; and
  • The annuity payments are fixed and guaranteed by the assets of the University of Maine System.

 

Donors are able to select the annuity payment intervals (usually quarterly) and to name their beneficiaries. In addition, donors may designate the future use of their gift.

Donors who are 60 years of age or older often find that they can receive fixed gift annuity payments larger than the returns they are currently receiving from their savings accounts or investments and at the same time make a gift that will ultimately have a substantial impact on university programs.

Donors over 50 years of age, particularly those who have contributed the maximum limits to their retirement plans, may want to consider a deferred gift annuity. Under this arrangement, income tax deductions are taken now, during high income years and annuity payments are postponed until later when they may be in a lower tax bracket. Because payments are deferred, donors receive higher annuity payments once they begin. This arrangement effectively supplements the donor’s retirement plan while providing a substantial gift to the donor’s University of choice.

Example of a Gift Annuity

Mrs. Smith, age 83, makes a cash gift of $10,000 in exchange for a gift annuity. She will receive quarterly payments of $220 ($880 annually) from the University of Maine System for the rest of her life. She is entitled to a charitable income tax deduction, for current income tax purposes, of about $4,671 (based on a discount rate provided by the IRS). Assuming Mrs. Smith is in the 15% tax bracket and can use the entire deduction, she will save about $701 in income taxes, making the net cost of her gift approximately $9,299. Of the $880 she receives each year, only $197.12 will be taxable at ordinary rates, and $682.88 will be received tax-free each year over her life expectancy, after which time the full income amount will be taxed as ordinary income. For a donor like Mrs. Smith, the payout, considering the income tax savings from the deduction and the partly tax-free payments, is comparable to receiving a taxable payout of 10.8%. The University she has selected will eventually receive a distribution of approximately $7,088, which will transfer to the University without the donor’s estate incurring any probate costs or estate taxes.

Establishing a Charitable Gift Annuity

A gift annuity is easy to establish. A simple one-page gift annuity agreement is written and signed by the University of Maine System, and a Disclosure Statement is signed by the donor. A gift annuity proposal can be prepared anytime for a potential donor to see how they and the University would benefit. Click on “Detailed Information” below for more detailed information on Charitable Gift Annuities, to see another sample gift annuity, and to view a sample Donor Proposal package, Gift Annuity Agreement and Disclosure Statement.

To contact a development officer to request more information and/or a proposal, click on the appropriate link below.

Try the Gift Calculator to estimate the annual amount you would receive from your gift annuity and the estimated tax deduction you would receive by clicking on the button below.

Contact a development officer to request more information and/or a proposal, click on the appropriate link below.

University of Maine Foundation
Sarah McPartland-Good
Director of Planned Giving
207-581-5100
Toll Free: 800-982-8503

University of Maine at Augusta
Staci Warren
Alumni and Advancement Manager
207-621-3299

University of Maine at Farmington
Kelly Dodge
Vice President for University Advancement Alumni Services
207-778-7258

University of Maine at Fort Kent
Linda Deprey
Development Officer
207-834-7800

University of Maine at Machias
Tom Potter
Vice President for Administration and Finance
207-255-1221

University of Maine at Presque Isle
Keith Madore
Director of Development and Alumni Relations
207-768-9568

University of Southern Maine
Bonnie Vance
Planned Giving Officer
207-780-4448

University of Maine System
Rebecca Wyke
Vice Chancellor for Finance and Administration,
and Treasurer
207-973-3343