A Conversation with Varra Financial Associates and The Germany Law Firm
Colorado families should take time to review their estate and tax planning strategies, especially with potential changes on the horizon. The federal estate tax exemption, established under the Tax Cuts and Jobs Act (TCJA), is set to expire at the end of the year. Without legislative action, exemption amounts could drop significantly in 2026, potentially exposing more estates to federal taxation. Partnering with an experienced estate planning attorney and a financial planner helps ensure your assets are protected for generations to come. In the following article, we collaborated with Varra Financial to discuss frequently asked estate planning and tax planning questions.
What is an inheritance tax? As of 2025, the U.S. federal estate tax, often referred to as an “inheritance tax,” applies to estates exceeding the $13,990,000 exemption amount per individual or $27,980,000 per married couple. This exemption amount was set under the Tax Cuts and Jobs Act (TCJA) but is scheduled to sunset at the end of 2025. If no legislative extension is passed, the exemption will revert to approximately $7 million per individual, adjusted for inflation, in 2026. Colorado does not impose a state estate tax.
My estate isn’t subject to federal estate tax. Do I still need an estate plan? While most families in the United States will not be subject to federal estate tax, estate planning remains crucial. A well-crafted estate plan ensures that your assets are passed to intended beneficiaries efficiently, avoiding unnecessary delays and legal complications. Beyond an investment portfolio, the taxable gross estate includes real estate, closely held businesses, and in some cases, life insurance policies. Proper planning can help mitigate potential tax burdens and ensure assets are distributed as intended.
What is the Federal Estate Tax Exemption, and what happens if the TCJA expires? TCJA significantly increased the federal estate tax exemption, raising it from $5 million to $10 million per person, indexed annually for inflation. For 2025, the exemption stands at $13,990,000 per person but is scheduled to revert to lower thresholds. It is possible that the current exemption will be extended or modified, but any changes will require new legislation and funding, which could be difficult and take months to work out.
“With uncertainty around the extension of TCJA and the potential for new tax legislation, flexibility is key to an all-weather estate plan,” says Gina Varra, owner of Varra Financial. “As we get closer to the sunset, there is greater urgency to take full advantage of today’s higher exemption. Waiting to plan until after changes occur may limit options and increase estate tax exposure.”
With all this uncertainty, how can annual gifting help? James Johnson of Varra Financial suggests, “Annual gifting is a key strategy to transfer assets during your lifetime while reducing your taxable estate.” In 2025, the annual gift tax exclusion is $19,000. This means a donor can gift up to $19,000 per recipient to an unlimited number of recipients without impacting the donor’s lifetime exemption. Additionally, transfers between U.S. citizen spouses are unlimited, both during life and at death. Consistently using this strategy can help lower the taxable value of an estate while facilitating tax-free transfers to loved ones.
Besides transfers to US citizen spouses, are there other transfer strategies that are not limited by the annual gift exclusion? Another powerful estate planning tool is the ability to make unlimited tax-free payments for tuition—room and board are not eligible—or eligible medical expenses. A qualified transfer must be paid directly to the educational, medical provider or insurance company to avoid counting against the donor’s annual gift tax exclusion or lifetime exemption. This strategy allows a donor to support loved ones while reducing their taxable estate.
There are many other strategies available to build and execute an effective estate plan. With potential changes on the horizon, now is the time to consider whether these or other planning techniques—such as trusts, charitable giving strategies, or other asset transfer methods—could be beneficial for your situation.
How often should I review my estate plan? Tax regulations are subject to change, both federally and locally, so it is important to have annual conversations with your estate attorney and financial planner. Regularly reviewing your estate plan ensures it remains aligned with current laws and your personal goals. At a minimum, you should reassess your plan every five years or upon major life changes such as marriage, divorce, the birth of a child, or significant financial shifts. A holistic estate plan should involve a coordinated approach among your attorney, financial planner, and CPA.
Meeting With an Estate Planning Attorney for Estate Planning At the Germany Law Firm, we help individuals and families protect their assets and legacy. We specialize in small business succession and estate planning. Call us today to schedule an initial consultation.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
