You want your financial success to secure your family’s future and make a lasting impact. Your estate plan is the ideal place to formalize your charitable goals. Federal law offers a very high estate tax exemption—$13.99 million in 2025 and $15 million in 2026—meaning most people will not owe federal estate taxes.
However, charitable giving is a powerful tool for strategic tax mitigation, given New York State’s much lower estate tax of $7.16 million for 2025. However, it is critical to note the “estate tax cliff”: if the taxable estate exceeds 105% of the exclusion amount, the entire estate is subject to the tax, and the benefit of the exclusion is lost.
Direct bequests for simple tax relief
A direct bequest is the easiest way to give. Naming a qualified charity as a beneficiary provides the unlimited charitable deduction, meaning the full value is deductible. However, the recipient organization must be recognized under federal and New York State law, and you must precisely draft the bequest in the estate planning documents to guarantee these benefits, which include:
- Deducting the full value of the donated asset from your estate
- Removing the asset’s full value from your gross taxable estate
This critical step reduces potential estate tax liability, especially in New York. You can easily support local causes while shrinking the portion of your estate subject to taxation.
Strategic trust solutions
Specialized trusts can also help you maximize both your philanthropic impact and your tax savings.
A charitable remainder trust (CRT) provides a steady stream of income to you or another named person for a set period or your lifetime. At the end of the term, the charity receives the remaining assets. Funding a CRT provides an immediate income tax deduction, which permanently removes the asset from your taxable estate.
A charitable lead trust (CLT) works in reverse: it provides an income stream to the charity first, for a set number of years. The remaining assets then pass to your non-charitable beneficiaries, such as your children. CLTs help you transfer wealth to your heirs with reduced estate and gift taxes because the value of the charity’s payments reduces the taxable amount passed to them.
Planning your financial and community impact
Strategic giving allows you to make a profound community impact while optimizing your estate value for your family. Gifts to institutions and causes right here in the Rochester area make a genuine difference. Your legacy helps continue their essential work. Crafting these sophisticated instruments with the guidance of a skilled estate planning attorney is advisable to ensure your intentions are honored and to maximize all tax benefits under New York law.
