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CO doesn’t have an estate tax – but you still need to plan ahead

On Behalf of | Feb 3, 2020 | Estate Planning |

Many people involved in the planning of an estate share a big concern: taxes. After a lifetime of earning assets and building a valuable estate, how large of a bite might the Colorado government try to take? Well, there is some good news.

Colorado’s estate tax isn’t just small. It is nonexistent.

There is no estate tax in Colorado

To put it simply, there is no estate tax under Colorado law. The state also does not have a gift tax, nor does it require an inheritance tax.

On the surface, this may appear to simplify things. However, that isn’t always the case.

For starters, depending on the value of the estate, you may need to take federal tax laws into account. As of 2020, the individual exemption limit for the estate and gift tax is $11.58 million. For couples, that figure increases to $23.16 million. The yearly gift exclusion amount, meanwhile, is $15,000. Someone who wants to pass on valuable assets to loved ones may need to take these hefty tax rates into account.

Other potential complicating factors

Estate tax laws are not the only outside factors that can threaten an estate. An effective estate plan needs to take far more into account. For those looking to protect their assets to the largest extent possible, that might include:

  • Capitalizing on all possible state exemptions
  • Using certain corporate structures to shield loved ones from creditors
  • Creating asset protection trusts
  • Utilizing marriage planning strategies to pass assets to a spouse
  • Considering how other states’ inheritance laws may affect heirs

The best strategy for an estate depends upon the unique situation at hand and the goals of the individuals. But in nearly all cases, a well-laid plan is better than no plan at all.

Even if there is no Colorado estate tax to fret over.

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