Charitable Remainder Trust Attorney New York

A charitable remainder trust (CRT) is one of the most powerful estate planning tools available under New York law for individuals who want to support charitable causes, generate lifetime income, and reduce their tax burden. Establishing a CRT requires careful drafting, compliance with federal tax requirements, and adherence to New York trust law. Our New York charitable remainder trust attorneys guide individuals, families, and business owners through every stage of creating, funding, and administering these sophisticated trusts.

Whether you are looking to convert highly appreciated stock, real estate, or closely held business interests into a stream of income while supporting a cause that matters to you, we can help you design a CRT that aligns with your financial goals and philanthropic vision.

What Is a Charitable Remainder Trust?

A charitable remainder trust is an irrevocable trust that pays income to the donor (or other named beneficiaries) for a fixed term of years or for life, after which the remaining trust assets are distributed to one or more designated charities. Because the trust is partially charitable, the donor receives an immediate income tax deduction equal to the present value of the charitable remainder interest.

CRTs are governed by Section 664 of the Internal Revenue Code and must comply with New York's Estates, Powers and Trusts Law (EPTL) when created by a New York resident or funded with New York-situs property. Properly structured, a CRT offers a unique combination of income, tax, and legacy planning benefits that few other vehicles can match.

Types of Charitable Remainder Trusts

There are two primary types of CRTs, and selecting the right structure is one of the most important decisions you will make with your attorney:

Charitable Remainder Annuity Trust (CRAT)

A CRAT pays a fixed dollar amount to the income beneficiary each year, equal to at least 5% but no more than 50% of the initial fair market value of the trust assets. Because the payment is fixed, a CRAT provides predictable income but does not allow for additional contributions after the trust is funded.

Charitable Remainder Unitrust (CRUT)

A CRUT pays a fixed percentage (between 5% and 50%) of the trust's assets, revalued annually. Income payments fluctuate with the value of the trust, offering potential growth as assets appreciate. CRUTs allow additional contributions over time and come in several variations, including:

• Standard CRUT (STAN-CRUT) — pays the fixed percentage regardless of trust income
• Net Income CRUT (NICRUT) — pays the lesser of the fixed percentage or actual trust income
• Net Income with Makeup CRUT (NIMCRUT) — allows shortfalls in lean years to be made up in later years
• Flip CRUT — begins as a NICRUT and converts to a standard CRUT upon a triggering event, such as the sale of an illiquid asset

Key Benefits of a Charitable Remainder Trust

For New York residents, charitable remainder trusts can deliver several significant advantages:

• Immediate income tax deduction for the present value of the charitable remainder, which can be carried forward for up to five additional years
• Avoidance of capital gains tax on the sale of appreciated assets contributed to the trust, since the CRT itself is tax-exempt
• Lifetime income stream for the donor and/or other beneficiaries
• Reduction of New York and federal estate tax by removing assets from the taxable estate
• Diversification of concentrated stock or real estate positions without an immediate tax hit
• Lasting charitable legacy for causes important to you and your family

Assets Commonly Used to Fund a CRT

Almost any appreciated, marketable asset can be contributed to a CRT. New Yorkers frequently fund CRTs with:

• Publicly traded stocks and mutual funds with significant unrealized gains
• Manhattan, Brooklyn, and other New York real estate held long-term
• Closely held business interests, S corporation stock (with caution), and LLC units
• Artwork, collectibles, and other tangible personal property
• Cash, when seeking an income tax deduction without liquidating other assets

Each asset class raises distinct legal and tax considerations. For example, mortgaged real estate can trigger unrelated business taxable income (UBTI), and S corporation stock cannot be held by most CRTs without disqualification. Our attorneys evaluate each proposed contribution carefully to avoid costly missteps.

How New York Law Affects Your CRT

While CRTs are primarily a creature of federal tax law, New York law plays a critical role in administration and enforcement. The New York Attorney General's Charities Bureau has jurisdiction over charitable trusts and may require notice of the trust's creation, annual filings, and reporting under the Estates, Powers and Trusts Law and Article 7-A of the Executive Law.

New York also imposes its own estate tax with a separate exemption amount, and the so-called "cliff" provision can cause estates exceeding 105% of the exemption to lose the exemption entirely. A properly drafted CRT can reduce the value of your taxable New York estate while providing the additional benefit of avoiding probate for the contributed assets.

Common Uses for a Charitable Remainder Trust

CRTs are highly versatile. Some of the most common scenarios in which our New York clients establish CRTs include:

• Selling a highly appreciated apartment building or brownstone to defer capital gains and generate retirement income
• Diversifying a concentrated stock position acquired through years of employment at a New York-based company
• Planning for the sale of a closely held business as part of an exit or succession strategy
• Supplementing retirement income while creating a meaningful gift to a university, hospital, religious institution, or community foundation
• Replacing a stretch IRA strategy by naming a CRT as the beneficiary of retirement accounts

The CRT Planning Process

When you work with our firm to establish a charitable remainder trust, we typically follow a structured process:

1. Goal-setting consultation — we discuss your income needs, tax concerns, family dynamics, and charitable intent
2. Modeling and analysis — we run projections on payout rates, deduction values, and after-tax cash flow
3. Selection of trust type and trustee — we recommend a CRAT, CRUT, or variation, and help you choose between an individual trustee, corporate trustee, or charity-trustee
4. Drafting the trust instrument — we prepare a customized trust document that complies with IRS sample language and New York law
5. Funding the trust — we coordinate the transfer of assets, including title work for real estate and proper retitling of securities
6. Ongoing administration — we assist with required filings, including IRS Form 5227, New York Charities Bureau registrations, and annual valuations

Why Choose Our New York Charitable Remainder Trust Attorneys

CRTs sit at the intersection of estate planning, tax law, and charitable giving. Mistakes in drafting, funding, or administration can trigger excise taxes, jeopardize the trust's tax-exempt status, or expose the trustee to personal liability. Our attorneys bring deep experience in New York trust and estate law and work closely with your financial advisor, accountant, and chosen charity to ensure your CRT functions as intended for decades to come.

Schedule a Consultation

If you are considering a charitable remainder trust as part of your New York estate plan, we invite you to contact our office to schedule a confidential consultation. We will review your goals, evaluate whether a CRT is the right tool for your situation, and outline a clear path forward.

You can contact us by phone at 212-233-1233 or by email at [email protected].