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.