2023 Tax Update – Federal and Colorado Changes

With inflation hitting the US and World hard the last couple of years, changes to tax rates were expected and as always bring some benefits and some detriments.  Here are the latest numbers for the major taxes involved with estate planning and administration. 

Lifetime Estate and Gift Tax Exemption

With the New Year brings an increase in the U.S. estate and gift tax exemption. The new exemption will be $12.92 million per individual for 2023 gifts and deaths, up from $12.06 million in 2022.  Keep in mind this rate doubles for married couples, who can now have a combined $25.84 million before any federal estate tax will be due.

Annual Gift Tax Exclusion

This year the annual gift tax exclusion will be increase again by another $1,000 per recipient to a total of $17,000 per recipient or $34,000 per individual from a married couple. 

The annual gift tax exclusion is the amount under which a gift may be given tax-free without counting towards or using up any of the givers lifetime gift or estate tax exemption. For example, Mrs. Smith can give each of her 2 children $17,000 this year and her husband can also give them each $17,000, for a total of $34,000 to each child.  They also could give a total of $34,000 to each of their 5 grandchildren.   This transfer of $238,000 to their descendants in 2023 is allowed without touching their combined $25.84 million gift tax exemption.

2023 Irrevocable Trust Income Tax Brackets

Trust Income Tax brackets increased slightly (as did individual/joint( to the following:

10% $0 to $2,9000

24% $2,901 to $10,550

35% $10,551-$14,450

37% $14,451 and higher

Colorado Small Estate Affidavit

The Colorado Small Estate Affidavit value increased by several thousand dollars to $80,000.   This is the value over which a probate is required for individually held assets at someone’s death. 

Do you have an Advance Healthcare Directive?

If not, let April 16th – National Healthcare Directives Day – help motivate you to get this done.

The last couple years of being in a worldwide pandemic have been hard on everyone. Most of us know someone who has died of COVID or at least been hospitalized in critical condition. The use of ventilators and other mechanical respiration as a very successful means of treatment has changed the way many view this type of intervention. Indeed, modern medicine can do amazing things, but it can also require some very difficult decisions.

Thinking about your own medical preferences and sharing those preferences with loved ones is critical. Your loved ones can’t act on your wishes unless they know what they are. Beginning this conversation can be a bit scary at first, but it’s a great gift for the people who care about you as well as to your own well-being during a healthcare emergency. Without the conversation, there can be confusion, conflict, and guilt in a situation that’s already very stressful.

To begin this healthcare decision conversation, talk about your values and experiences, what’s important to you. Eventually as part of complete advance care planning, you will want to sign a medical power of attorney and possibly other estate documents. A power of attorney is a legal document that names one or more people you trust to make medical decisions if you are unable to make them for yourself.

However, it is important to remember that advance care planning is more than just a document. It’s a process of planning and conversation that needs to be revisited throughout your lifetime as your medical needs and technology change.

National Healthcare Decisions Day (NHDD) is coming on April 16th. This wonderful nationwide initiative encourages adults of all ages to plan ahead of a health crisis. The Conversation Project (theconverstationproject.org) and Five Wishes (fivewishes.org) are two wonderful organizations that provide numerous resources to help you start planning for your own directives as well as having these conversations with your loved owns to ensure they have also planned. Estate planning firms, like Holmes Shirley Law, also can be a great local community resource to guide you through this process.

When we make decisions ahead of time and put those wishes in writing, we bring peace of mind to our families. We enable caregivers to advocate for us when we are unable to do so for ourselves.

By Karen H. Shirley, Esq.
Holmes Shirley Law

Update on 2022 Federal Tax Numbers

The start of a new year means new adventures, exciting opportunities, and planning for the year ahead. For some, it’s the start of a new job, the promise of a new business venture, or a move to a new city. For others, it may be focusing on their finances, working towards new health and wellness goals, or finally tackling those tasks that didn’t get done last year.

In the world of estate planning, this means staying up to date on the latest estate and gift tax exemption announcements from the IRS, who recently announced the changes for 2022 to the lifetime estate and gift tax exemption, the annual gift tax exclusion, and the amount you may gift to a non-US citizen spouse. 

Lifetime Estate and Gift Tax Exemption

With the New Year brings an increase in the estate and gift tax exemption. The new exemption will be $12.06 million per individual for 2022 gifts and deaths, up $360,000 from $11.7 million in 2021.

What exactly does this mean?

This increase means that starting this week, an individual can shiel $12.06 million and a married couple can shield a total of $24.12 million during their lifetimes without having to pay any federal estate or gift tax. For a couple who had previously maxed out lifetime gifts, they may now give another $720,000 in 2022.

Annual Gift Tax Exclusion

This year the annual gift tax exclusion will be increasing by $1,000 per recipient due to inflation. The gift tax exclusion, which has held steady at $15,000 per recipient for the last four years, will now be $16,000 per recipient – the highest exclusion amount to date.

What does the annual gift tax exclusion do?

It allows a taxpayer to give the excluded amount per recipient tax-free without using up any of his or her lifetime gift and estate tax exemption.

Can you give me an example?

Absolutely!  For a married couple, each spouse can gift $16,000 per recipient per year, for a total of $32,000/year per recipient as of January 1, 2022. So if you and your spouse have two children and four grandchildren, you may transfer a total of $192,000 in 2022 to your descendants without touching your combined $24.12 million gift tax exemption.

Gifts to a Non-US Citizen Spouse

It is important to note that gifts to a non-US citizen spouse are limited when compared to gifts when both spouses are US citizens. 

US Citizen Spouse vs Non-US Citizen Spouse

For spouses who are both US citizens, unlimited amounts can be transferred to each other while both spouses are living without incurring any gift tax.  The reasoning behind this is that any assets in excess of the couple’s combined estate tax exemption ($24.2 million in 2022) will be taxed at the death of the surviving spouse.  In this case, transferring assets to the survivor only defers the tax that the IRS will eventually collect.

A non-US citizen spouse may not be subject to the US estate tax at death.  Thus in the case of a non-US citizen spouse, a US citizen spouse can transfer an initial $164,000 and then only the annual exclusion amount without being subject to the gift or estate tax. 

One Month to National Healthcare Decisions Day

It is one month until National Healthcare Decisions Day (NHDD).  This day is part of a national movement to help increase the number of U.S. citizens who have their healthcare preferences documented and have empowered someone of their choosing to act on their behalf to make decisions when they are unable to.

Some of the grim facts:

The U.S. Agency for Healthcare Research and Quality, in a 2003 article, “Advance Care Planning: Preferences for Care at the End of Life,” found the following:

  • Less than 50 percent of the severely or terminally ill patients studied had an advance directive in their medical record.
  • Only 12 percent of patients with an advance directive had received input from their physician in its development.
  • Between 65 and 76 percent of physicians whose patients had an advance directive were not aware that it existed.

In support of getting these critical documents in place for everyone, Holmes Shirley Law is offering 20% off on all healthcare directives during the entire month of April.  We are also working to help promote the day and knowledge about healthcare decisions in the Denver Metro area.

Please call us today to learn more – 720-248-7621.

The Importance of Business Succession Planning

All too often business owners are so focused on running their business that they fail to plan for its succession, or their own estate plan which inevitably has an impact on the succession of the business.  According to Bloomberg & PricewaterhouseCooper, 8 out of 10 business fail within the first 18 months and 70% of businesses never make it past the first generation. Interestingly, a commonality among the majority of the businesses that succeed – a written business plan that includes succession planning.

So what types of questions arise in the course of business succession planning? What can you start thinking about today?

First, you should consider who you would like to take over your business after you. This may be your children or it may be employees or managers within your business. You also might want to sale the business outright.

Common mistakes that are made when considering who should get the business is whether your children are even interested, or equally interested, in running the business and whether joint owner’s spouses or children will work well with the current or future owners. Life insurance policies often can be purchased to provide equality among children (one gets the business, the other the life insurance proceeds) or to buy out uninterested or undesirable heirs when one partner becomes incapacitated or dies.

Next, you should consider how you want to transfer the business.

You can sell the business outright. This can be done through selling the interest to children, employees or others. This may be a good option for those who need income from the business to use in retirement.

You can use a buy-sell agreement.   These agreements are ideal for entities with multiple owners or for those who have selected the person(s) they would like to transfer the business to. In a buy-sell agreement, a business owner can use triggering events, like retirement, incapacity and death, to begin a process for the designated successor to purchase his or her interest in the business.

You can transfer the ownership through a trust.   A revocable living trust is a great estate planning tool to assist with business succession. The business owner first transfer the business to the trust, then name’s the intended successor(s) within the trust. Prior to the business owner’s death, he or she serves as trustee and beneficiary and continues to run the business as normal.

Finally, your business succession plan needs to work in conjunction with your own personal estate plan. If the goals and objectives of these two plans do not align, your planning efforts in both areas may fail, or at least not work as intended.

The most important thing you can do for your business is to make a plan.  Delaying is the first and most common succession planning mistake.  To have a succession plan that works for your business, and family, it is important to create a plan early, then lay the groundwork to implement the plan, which often takes several years and consultations with a variety of professional advisors from business attorneys, insurance brokers and financial and tax advisors. For more information, contact us today at 720-248-7621 or  [email protected]

Do-It-Yourself Estate Planning – The Good, the Bad & the Ugly

America is a nation of do-it-yourselfers, but building a deck and creating a legally valid estate plan are two entirely different things – and a less-than-perfect deck won’t devastate your family’s financial future or the relationships among the people you care about most.

The prevalence of online legal services has led many people to believe that they can create legal documents cheaply and those documents will be just as effective as if they had visited an estate planning attorney.   The majority of the time this is wrong.

The Good

I am slightly tempted to leave this section blank.  But in all seriousness, DIY is very tempting to a lot of people so here  are a few of the perceived goods:

Inexpensive – a lot of individuals interested in doing estate planning think that all they need is a “simple will” and have sticker shock after speaking with an attorney or law firm over the cost of a complete estate plan.   While going it alone with a book or a form may save you money now, it likely will cost you and your loves ones more in the future.

Time Savings/Flexibility – Do-it-yourself estate planning can be done on your own time schedule.  That much is true.  But to do it right, you will need to spend your evenings, weekends or other free time educating yourself about the law and the available options so you can make the right choices or the documents you complete might not be doing what you think they do.  Remember attorneys spend 3 years after college studying the law and then, in Colorado, 45 hours (minimum) of continuing legal education every 3 years.  That doesn’t even include their own on the job training.

As demonstrated by a recent case in Florida highlighted by the ABA Journal, what you save today may cost your heirs or beneficiaries much, much more later.

Why DIY Estate Planning is a Bad Idea 

No legal advice – Online sites offering “estate plans” are little more than document mills that churn out the same generic forms over and over.  They are not attorneys and cannot advise or warn you if you make a mistake. Plus, who will be there for your family when something happens to you if you’ve used an online document drafting service?  Think your family doesn’t need an advisor to support them when you are gone?  Or incapacitated? Think again.

Consider this: Erica’s father was killed in a motorcycle accident. Dad didn’t leave much behind, but he did leave an estate plan prepared by a trusted family attorney.  Had the family attorney not been there for Erica and her brother, they would have taken what dad did leave and drowned their sorrows in a European backpacking trip.  Thanks to this family attorney, though, Erica and her brother now have a healthy trust fund set up for them for life with the proceeds of a successful wrongful death case.

Leaving it to your family to know what to do after you’re gone is a big mistake for the people you love.

One size doesn’t fit all – your family is different from everyone else’s family.  Just like every state has different inheritance laws, every family has different situations.  An online form will not help you protect child or relative with special needs, or protect a child’s inheritance from creditors or a nasty divorce.  An online form cannot tell you how to protect assets from taxes or help you achieve your financial or charitable goals.

And, an online form cannot keep your family out of conflict during a time of grief.  Even if you don’t have a lot of assets to leave, whatever you do have will be subject to distribution between the people you care most about.  Some of the biggest disagreements we’ve seen after death, aren’t about loads of money, but about the little things, like burial wishes, and who was promised grandma’s wedding ring, dad’s hunting knife or the heirloom teapot, and those little things aren’t going to be dealt with well with form documents.

Save now, pay later – you may think you are saving money by using an online service to create your will or trust, but it is impossible to make a fair comparison since the services provided are entirely different.

An estate planning attorney creates an entire plan tailored to your individual needs in legal documents that will stand up in court, and advises you on ways to cut taxes now as well as in the future, save for retirement and long-term care and truly protect your unique wishes.  No online service does that.

In addition, your trusted advisor is going to be there for your family when you cannot be. The people you love will need someone to turn to after you are gone.  Do you want them to be stuck with figuring out who that should be during their time of grief? Or do you want to leave behind the gift of having taken care of things well during your lifetime and a trusted advisor to hold their hand when you no longer can?

We invite you to take advantage of our specialized legal services for families with a Initial Estate Planning Session.  Call our office today at 720-248-7621 to schedule a time for us to sit down and talk about designing an estate plan that fits the needs of you and your family.

Vacations are the Perfect Time for Families To Talk About Estate Planning

Memorial Weekend is coming, and it traditionally has marked the start of the “summer” season.   I know we will be hosting and attending BBQs and neighborhood gatherings.   We are also busy finalizing summer plans.    These plans, like those of most Americans, include visiting with our extended families.  While there are few perfect times to talk with parents about their estate plan, the relaxed times you spend together on vacation can be one of them.

Here are some tips on how to conduct this critical conversation:

Find a good place to start.  One of the best ways to ease your parents into a financial discussion is to bring up your own.  Tell your parents that you were looking into your own estate plan and wondering if they had already executed their own.  Sometimes you can use scare tactics to good effect – there are usually a lots of stories about celebrities or others who have neglected to plan and paid the price with dire consequences.  If you missed these headlines,  read our March Newsletter for an article on the late Paul Walker’s estate.

Take it easy.  If you feel that parents may need some help with organizing their financial lives, be reassuring rather than applying pressure.  Let them know that you want to make sure their financial independence is kept intact for as long as possible.  Take things one step at a time, such as extending an offer to help them use online bill pay or assist them with organizing their information at tax time.

Respect boundaries.  Many parents feel uncomfortable discussing their finances with their children.  If you face this obstacle, let your parents know that you at least need to know where to find their important documents, or who does know where to find these documents besides them.   Reassure them that you aren’t attempting to control them in anyway but you simply want to help and make things as easy as possible for you and your siblings when something does happen.

Offer options.   Discuss the safety of important documents and suggest they either use a safety deposit box or fire-proof, water-proof safe for originals and have a third party, such as an attorney, financial planner, one of the family, or a trusted friend keep copies.   Learn and share information about services such as DocuBank, that provide online storage of medical directives and other important healthcare information and the importance of everyone’s primary care doctor having copies of these documents as well.

Sometimes initiating a conversation with parents about estate planning can be easier with the help of a Personal Family Lawyer®.   At Holmes Shirley Law, we can help.  Call our office today at 720-241-7621 to schedule a time for us to sit down and talk about designing an estate plan that fits the needs of you and your family.

How Advance Medical Directives Became a Way of Life in One American Town

This is a heart warming story about a town has done what National Healthcare Directives Day hopes to achieve for all of America…

With just over 50,000 residents, La Crosse is a lot like other small American towns – but there is one thing that makes La Crosse stand out:  96% of La Crosse residents who have died have had an advance medical directive in place.  Nationally, the percentage of Americans with an advance directive stands at about 30%.

Actually, there are two things that make La Crosse stand out:  the town also has lower healthcare costs than any other place in the U.S.  And these two things – a high incidence of residents with advance directives and low healthcare costs — are inextricably linked.

According to a recent NPR story, all this came about because of one man:  Dr. Bud Hammes, Medical Humanities Director at Gundersen Hospital in La Crosse.  Dr.Hammes often found himself sitting with families of terminally ill patients, trying to figure out what to do next.  He said the conversations were excruciating: “Did mom ever say anything to you?” “Do you know what dad wants?”  He said that the moral distress of the families was tangible.

Dr. Hammes knew that this could be avoided, since most patients were usually sick for years.  So he started training nurses to ask patients if they wanted to sign an advance directive and over the years planning for death has become a way of life in La Crosse.

And the lower healthcare costs?  Dr. Hammes said that the reduction in spending was an accident, a byproduct of letting people make their own choices.  He said that when you let patients choose and direct their care, they often make a much less expensive choice.

You can listen to the entire NPR story here:

NPR: Living Wills are the Talk of The Town in La Crosse, Wis.

Making end of life plans is one of the most comforting things you can do for your loved ones.  We strongly believe in the importance of this for every adult, and encourage families to have conversations about each others wishes.  To put the proper protections in place for your family, contact our office at 720-248-7621 to schedule a time for us to sit down and talk.  We normally charge $500 for an Initial Estate Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

National Healthcare Decisions Day – April 16th


Holmes Shirley Law, along with other national, state and community organizations, will be involved with National Healthcare Decisions Day (NHDD).  This is a national effort to highlight the importance of advance healthcare decision-making.

Having swift and immediate access to well-drafted healthcare directives in a medical emergency can reduce stress on patients, hospital staff, and most importantly, loved ones.   Additionally, making healthcare decisions before an actual medical emergency is critical.  

The comprehensive estate plans provided by Holmes Shirley Law include the personalized healthcare directives that clients need in a medical emergency.  These documents can include a healthcare power of attorney, living will, HIPAA release, among others.   Our firm also emphasizes to clients the importance of talking to their family about their wishes.  These conversations can make difficult situations later on much easier.  

Holmes Shirley Law also takes its commitment to healthcare decisions one step further by making sure that clients’ healthcare directives are immediately available to family members and to the hospital in an emergency.  With a membership in DocuBank provided as part of all estate planning done with Holmes Shirley Law, clients know that a hospital can get their legal directives and other critical medical information around the clock, just by carrying a wallet card.

In honor of NHDD, Holmes Shirley Law is providing information and tools for the public to talk about their wishes with family, friends and healthcare providers.  The firm can also assist with the execution of written advance directives (healthcare power of attorney and living will) in accordance with Colorado state laws.

Specifically, on April 16, Holmes Shirley Law will be hosting an informational session on healthcare directives at 9:30 am at their office in downtown Castle Rock as well as offering ½ off preparation of simple healthcare documents (a $125.00 savings) from 10:30 am until 2:30 pm.  Space is limited so please contact us at 720-248-7621 to reserve your spot or visit their website at: www.ColoradoEstateLaw.com for more information.

Other good information about National Healthcare Decisions Day is available at www.nhdd.org and www.docubank.org.

What’s Changed in Your Life?

Estate planning is not a “set it and forget it” kind of thing. Your life changes, your assets change, the laws change — and if your plan doesn’t change, your family gets caught holding the bag. The people you love most end up bearing the brunt of your failure to act.

Conducting a proper review of your estate plan will help identify the potential need to update your plan because of:

Life transitions:  Have any babies been born, loved ones died, people gotten divorced or married?   If so, you need to revisit your plan.

Changes in the law:  Changes in federal and state tax laws may require updates to your healthcare and financial powers of attorney. State regulations can also be revised to open up new wealth planning strategies that should be a part of your estate plan.

Changes in assets:  Has your net worth gone up or down?  Have you invested in any new assets, such as businesses,  opened new bank accounts, retirement accounts, insurance policies, real estate or anything similar?  If so, your plan needs to be revisited.  And the spreadsheet of assets you have for your family (you DO have one, right?) needs updating.

Funding of assets and beneficiary designations:  One of the most common mistakes people make is not properly completing the transfer of assets into a trust within their estate plan.  Another common error is having beneficiary designations that are inconsistent with the distribution language in the estate plan.  We recommend a review of those matters annually.

If you do not review your plan and update it regularly, your family will have to deal with the consequences. If you would like more information about creating or updating your estate plan, call our office today at 720-248-7621 to schedule a time for us to sit down and talk. We normally charge $750 for an Estate Plan Review but if you are an existing client, we’ll waive that fee and if you are coming to us for the first time and book an appointment in April or May, we will waive all but $250 of the fee.  Call 720-248-7621 today and mention this article.