Charitable Giving & Estate Planning in New York

Generosity and good tax planning are not mutually exclusive — in fact, for New Yorkers with substantial estates, they are deeply complementary. Charitable giving, when woven strategically into an estate plan, can dramatically reduce New York and federal estate taxes, provide income benefits during life, and create a lasting legacy that reflects your deepest values. Yet many individuals either give too little attention to charitable planning or rely on simple charitable bequests in a will — leaving significant tax savings and philanthropic impact on the table.

At Morgan Legal Group, P.C., charitable planning is an integral part of the comprehensive estate planning we offer. Attorney Russel Morgan, Esq. works with New York families, business owners, and professionals to design charitable strategies that are simultaneously meaningful and financially sophisticated. This guide explains the primary charitable planning vehicles available under New York and federal law, and how to choose the right approach for your situation.

Why Charitable Giving Is Especially Powerful in New York

New York State imposes its own estate tax in addition to the federal estate tax, making the combined tax burden on large New York estates among the highest in the country. The New York estate tax rate ranges up to 16%, with a notorious "cliff" provision that can tax the entire estate — not just the amount above the exemption — if the estate exceeds 105% of the applicable exemption. Against this backdrop, charitable deductions take on amplified importance:

• Charitable bequests reduce the New York taxable estate dollar-for-dollar, potentially avoiding the cliff and saving tens or hundreds of thousands in state taxes alone
• Lifetime charitable gifts to qualified 501(c)(3) organizations generate federal income tax deductions, which are particularly valuable for high-income New Yorkers in the top combined city, state, and federal tax brackets
• Charitable trusts can provide income streams while simultaneously reducing estate and income taxes and benefiting chosen causes

Beyond the tax advantages, charitable planning allows you to direct where a meaningful portion of your wealth goes — to institutions and causes you care about — rather than to the government through taxation.

Charitable Remainder Trusts: Income Now, Legacy Later

A Charitable Remainder Trust (CRT) is an irrevocable trust that provides income to the grantor (or other named beneficiaries) for a period of years or for life, with the remainder passing to one or more charities upon the trust's termination. CRTs are among the most versatile charitable planning tools available:

Charitable Remainder Annuity Trust (CRAT)

A CRAT pays a fixed dollar amount annually — at least 5% of the initial fair market value of the contributed assets. The payment amount is set at the time of creation and does not change. CRATs are ideal for donors who prioritize payment certainty and predictability.

Charitable Remainder Unitrust (CRUT)

A CRUT pays a fixed percentage of the trust's fair market value, recalculated annually. Payments fluctuate with the portfolio's performance. CRUTs are often preferred by donors contributing appreciating assets or who want payments to keep pace with inflation.

Key benefits of contributing to a CRT include an immediate partial charitable income tax deduction (based on the actuarial present value of the remainder interest), removal of the contributed assets from the taxable estate, avoidance of capital gains tax on appreciated assets contributed to the trust (the trust sells and reinvests tax-free), and the ongoing income stream. Our charitable planning practice helps New York clients design and fund CRTs that maximize each of these benefits.

Charitable Lead Trusts: Giving First, Benefiting Family Later

A Charitable Lead Trust (CLT) is the structural inverse of a CRT. With a CLT, the charity receives income for a period of years, after which the remaining assets pass to family members or other non-charitable beneficiaries. CLTs are particularly effective when:

• The grantor wants to transfer appreciated assets to heirs with reduced gift or estate tax, using the charitable income interest as a deduction to offset the taxable transfer
• Interest rates are low — in low-rate environments, the charitable deduction is larger and the taxable remainder transferred to heirs is correspondingly smaller
• The grantor has charitable intentions but also wants to preserve ultimate family ownership of transferred assets

A Grantor Charitable Lead Annuity Trust (GCLAT) or Non-Grantor CLT each have distinct income tax and gift tax consequences that must be analyzed carefully with counsel. Our estate tax planning team evaluates which structure is most advantageous given current tax law and the client's specific asset base and family goals.

Donor-Advised Funds: Flexible Philanthropy for New Yorkers

A Donor-Advised Fund (DAF) is one of the most accessible and flexible charitable planning tools available. A DAF is a charitable giving account sponsored by a public charity (such as a community foundation or a financial institution like Fidelity Charitable or Schwab Charitable) into which the donor makes irrevocable contributions and receives an immediate tax deduction, with the ability to recommend grants to specific charitable organizations over time.

DAFs are particularly well-suited for New York donors who:

• Want to make a large charitable contribution in a high-income year (when the deduction is most valuable) but have not yet decided which charities to support
• Plan to contribute appreciated securities or real property (avoiding capital gains tax on the contribution while taking a fair market value deduction)
• Want to involve children and grandchildren in charitable decision-making and philanthropic values transmission without the administrative burden of a private foundation
• Are simplifying their estate plan and want a single vehicle to handle charitable giving across multiple causes and organizations

Private Foundations: Maximum Control, Maximum Impact

For donors who wish to establish a lasting philanthropic institution under family control, a private foundation offers the deepest level of oversight over grant-making, investment strategy, and organizational purpose. A private foundation is a 501(c)(3) organization — typically structured as a New York nonprofit corporation or trust — funded by a single donor, family, or corporation.

Advantages of a private foundation include:

• Complete control over grant-making decisions and charitable mission
• Ability to employ family members in foundation operations and pay reasonable compensation
• Perpetual existence that can continue the family's philanthropic legacy across multiple generations
• Ability to make program-related investments (PRIs) in addition to grants
• Substantial estate tax deduction for amounts contributed at death

Private foundations are also subject to significant ongoing compliance obligations under the Internal Revenue Code, including the annual 5% distribution requirement, rules against self-dealing, excise tax on investment income, and required Form 990-PF filings. They are best suited for donors intending to contribute $1 million or more. New York adds its own registration and reporting requirements through the Attorney General's Charities Bureau.

Charitable Bequests in Your Will and Trust

The simplest form of charitable giving is a testamentary bequest — a direction in your will or revocable trust that a specific sum, percentage of the estate, or particular asset passes to a named charity at death. Despite its simplicity, a well-crafted charitable bequest strategy can produce powerful results:

• Specific dollar bequests provide certainty but can erode the residuary estate if the estate shrinks before death
• Percentage of residuary estate bequests are more flexible and automatically adjust as the estate grows or shrinks
• Specific asset bequests (e.g., leaving your IRA to charity) can be particularly tax-efficient, since charities are tax-exempt and can receive IRA distributions without income tax, while heirs receive other assets with no income tax consequences
• Contingent charitable bequests pass assets to charity only if primary beneficiaries predecease you — a backstop that reduces estate tax risk if the estate plan fails

For more charitable estate planning resources, visit morganlegalny.com/estate-planning.

IRA and Retirement Account Charitable Strategies

Retirement accounts deserve special attention in charitable planning because of their unique income tax treatment at death. When a non-charitable beneficiary inherits an IRA, they must generally withdraw the funds — and pay income tax on those withdrawals — within ten years of the original owner's death (under the SECURE 2.0 rules). Charities, however, pay no income tax on inherited IRA distributions.

This creates a powerful planning opportunity: by designating charitable organizations as beneficiaries of your IRA (the most income tax-burdened asset class), while leaving other assets (stocks, real estate with step-up in basis, Roth IRAs) to family members, you can maximize the after-tax value of your overall estate transfer. The charity gets 100 cents on every dollar of the IRA, while your family receives assets that carry little or no income tax liability.

Additionally, donors age 70½ or older may make Qualified Charitable Distributions (QCDs) directly from their IRA to charity — up to $105,000 per year in 2026 — which count toward required minimum distributions without being included in taxable income. This is particularly valuable for New York donors who may not be able to fully deduct charitable contributions due to the federal $10,000 SALT deduction cap affecting their itemization decisions.

Integrating Charitable Planning Into Your Overall Estate Plan

The most effective charitable planning is not an add-on — it is integrated from the beginning into the full estate plan architecture. Decisions about the proper mix of charitable trusts, bequests, DAFs, and foundations interact with choices about asset distribution to family, trust structures for family beneficiaries, tax planning, and business succession.

At Morgan Legal Group, we begin every comprehensive estate planning engagement by understanding our clients' full financial picture, family structure, and values. For clients with philanthropic goals, that conversation shapes every subsequent planning decision — from which assets to contribute to charity versus which to leave to family, to how trust instruments are drafted, to how business interests are structured for optimal charitable giving efficiency.

If building a meaningful charitable legacy while minimizing the New York tax burden on your estate is important to you, we invite you to contact our office at (212) 561-4299 or visit us at 15 Maiden Lane, Suite 905, New York, NY 10038.