IRS Raises Estate Tax Exclusion

Every family should consider the impact of taxes on their assets when making important decisions. High net-worth individuals and families, however, know they should especially consider relevant tax laws before making big estate plan or asset management changes. But staying on top of the ever-changing task landscape can be tricky. Even small changes year over year can lay the foundation for tax-saving opportunities—or pitfalls. A skilled estate planning attorney can help clients with substantial estates plan for these changes and nuances while considering the potential impact of laws on the value of the estate.

For example, the IRS announced it will raise the estate and gift tax exclusion limit in 2023. Individuals can gift up to $12.92 million to their heirs and beneficiaries, an increase from $12.06 million in 2022. Combined limits for married couples will be nearly $26 million in 2023.

Tax-free gifts also see a higher annual limit for 2023. Individuals can give away $17,000 per recipient without reducing the lifetime exclusion, a $1,000 increase from $16,000 in 2022. These adjustments are a routine part of the IRS’s annual inflation adjustments.

But act now to take advantage of these exclusions. The current gift and estate tax exemption provision will sunset in 2025 unless Congress takes action to renew it. Then, the amount will drop to the prior law’s inflation-adjusted $6.2 million. But Congress could accelerate the sunset provision even sooner than 2025—and it even attempted to do just that in the now-failed Build Back Better plan. Do not delay creating a plan to ensure your wealth is shared with your family—the tax landscape can change at any moment, and you do not want to miss out on even minor year-over-year limit increases.

Estate Tax in Colorado

Colorado is one of 38 states with no estate tax. Colorado eliminated its estate at the end of 2004 after a gradual reduction. This means that high-net-worth individuals can take advantage of the federal exclusion without considering any state taxes or restrictions. Colorado also has no inheritance or gift tax.

Estate Planning Tools

Individuals and families can use these exclusions to employ advanced estate planning tools such as traditional trusts, generation-skipping trusts, and Spousal Lifetime Access Trusts, or SLATs, which allow you to transfer assets between spouses without incurring substantial tax liabilities. These tools also allow the assets to avoid probate, which can otherwise pose a substantial headache for heirs and beneficiaries down the line. An estate planning attorney can help you determine which tools and techniques make the most sense for your unique circumstances.

Call a Colorado Estate Planning Attorney

Call a Boulder estate planning attorney today to make sure your estate plan takes the best advantage of all available tax laws—and avoids any unpleasant surprises. Braverman Law Group can help with all of your estate planning needs, including establishing trusts and planning for taxes. To schedule a free, no-obligation consultation with one of our trusted attorneys, give us a call today at (303) 800-1588.