Commitment to Our Clients Serving those in need for over four decades.

What, me worry?

Worried about the Federal Estate Tax? Many of my clients come in and want to arrange their estates to minimize or eliminate any Federal Estate Tax. For most of my clients that is not a problem. Since 2016, the estate and gift tax exemption is $5.45 million per individual, up from $5.43 million in 2015. That means an individual can leave $5.45 million to heirs and pay no federal estate or gift tax. A married couple will be able to shield $10.9 million from federal estate and gift taxes. The annual gift exclusion (the one where you don’t even have to file a gift tax return) remains the same at $14,000.

What many of my clients are thinking about is the amounts that used to be exposed to Federal Estate Tax. The exemption was as low as $2 million in 2008, $1 million in 2003 and $675,000 in 2001. The estate and gift tax exemption amount was set at $5 million in 2011 and indexed for inflation. The top federal estate tax rate is now 40%.

For my Colorado clients, they have an additional benefit because Colorado does not have an estate or inheritance tax. What that means is that for a Colorado individual whose estate is under $5.45 million NO Federal or Colorado estate or inheritance tax is paid. For most clients, having to have an estate plan designed to eliminate taxes is a thing of the past.

Just a word of caution, however, there are proposals to reduce the exemption amount from $5,000,000+ to $3,500,000. Currently, it is unlikely that any such change will take place but there is a possibility. Regardless many of my clients would not be impacted either way if their estates are under $3,500,000 or a married couple with $7,000,000 of assets.