The Estate Tax in Colorado: Planning for the Unplannable

Did you know that when you die, the federal government can impose a tax on your estate before your beneficiaries inherit your assets? In our line of work, we often hear rumors about how the government will raise or lower this estate tax, which can lead to uncertainty regarding how to best structure an estate plan. On today’s blog, we talk about how possible changes to the estate tax could affect you, your loved ones, and your estate planning journey. As always, with specific questions about how this post applies to you, reach out to one of our Boulder estate planning attorneys from Braverman Law Group.

What is an Estate Tax?

By definition, an estate tax is a tax levied on the net value of a decedent’s estate. The federal government imposes this tax before beneficiaries can inherit the decedent’s assets. Fortunately, the state of Colorado does not impose a state tax in addition to the federal government’s estate tax. Other states, such as Maryland, New York, and Oregon, do impose an additional estate tax.

What is the Estate Tax Exemption Amount?

In 2025, the estate tax exemption amount is $13.99 million. This amount is up from $13.62 million in 2024. For married couples, the estate tax exemption amount is $27.98 million. This means that any individual with less than $13.99 million in assets does not have to pay any estate tax. It is worth noting that this threshold amount is not just how much cash a person has upon death, but instead the value of their entire estate, including real property, investment accounts, and retirement accounts, minus any pertinent gifts.

The federal government decides how much to tax each estate based on how much more than $13.99 million the estate contains. For those with between $1 and $10,000 more than $13.99 million, the tax rate on the additional estate value is 18 percent – however, the government only taxes the amount that surpasses the threshold. For estates with $1 million more than $13.99 million, the tax rate is a whopping 40 percent. As the estate’s surplus (or its amount over $13.99 million) increases, so does the estate tax rate. 

How is the Estate Tax Exemption Expected to Change? How Can You and Your Loved Ones Prepare?

On January 1, 2026, the amount that a person can pass on at their death without the estate tax will change to a number between $6 and $7 million. There is also chatter in Congress of bringing back the “Trump tax cut,” which is what originally brought the exemption amount to $13.99 million this year. There is also talk, at least among some politicians, of removing the estate tax entirely.

But here is what is really going to happen: parties and politicians will continue to play political football. There is no way to accurately predict how the estate tax rate will evolve over time. The wise planner prepares for a variety of possible exemption amounts at their death, retaining an expert estate planning attorney to help them do that as thoroughly as possible.

For couples, an informed estate planning attorney can help you set up a trust that allows the surviving spouse to decide how much needs to be protected from the estate tax. This kind of trust can be a powerful tool for couples with high net worths, and especially with clear communication as a couple ahead of time, the trust can then help wealth pass onto future generations.

For individual people, it can be helpful to add charitable beneficiaries that will receive donations if the estate becomes taxable. This means that if the estate hits above the federal government’s threshold amount, the estate will start to give to the decedent’s charity of choice. Not only does this tool benefit the community, but it also allows the estate to avoid the federal estate tax altogether. Other tricks and tools might be available to you and your estate, depending on your personalized goals, needs, and priorities.

The Takeaway

Overall, our advice is this: do not count on any party to eliminate the estate tax. The government eliminated the tax in 2010, and unfortunately, it came roaring back the next year. While it can be tempting to plan as if the tax will be nonexistent, it is far better to plan or a variety of circumstances and work closely with an estate planning attorney to make sure you do everything in your power to protect your hard-earned assets. With the right legal team by your side, you can look out for yourself and your heirs in both the short-term and long-term future.

Do You Need a Boulder Estate Planning Attorney on Your Team?

When looking for a Boulder estate planning attorney, you should seek out a team that is experienced, informed, and trusted by the community. With so many changes in the political and legal landscape, it is crucial to stay in close contact with your estate planning attorney so that you can keep your estate plan in line and intact with our ever-changing world.

At Braverman Law Group, we always say that informed choices lead to peace of mind. Our team specializes in helping our clients make thoughtful decisions regarding their estate plans so that they (and their loved ones) can rest assured, knowing they have done everything in their power to prepare for the future. If you don’t yet have a Boulder estate planning attorney to help you navigate the estate planning process, consider our firm at Braverman Law Group. We have years of experience creating customized estate plans for our clients and their families, and we would be honored to do the same for you.

For a free, no-obligation consultation with one of the Boulder estate planning attorneys at our firm, give us a call today at (303) 800-1588. If you prefer, you can also fill out our online form to tell us about your legal issue and have a member of our team reach back out to you as soon as possible. Our firm covers estate planning, trust administration, special needs planning, Medicaid planning, and more.