Many people think that, as an estate planning and estate attorney, my focus is on estate taxes. While that was true in the past, there are 15 million reasons that estate planning lawyers focus more on income taxes. Let’s explore how this happened.
When I started as an estate attorney, working on estate plans, wills and trusts, the federal estate tax exemption was $67,000. The federal estate tax exemption is the amount you can leave to people you are not married to before the federal estate tax kicks in. Remember that you pay different taxes during your life:
- Income taxes as you earn a living
- Capital gains taxes if you sell property or investments
- Income taxes on retirement plans when you draw them down
- Estate taxes on the value of your property when you die.
- With the exception of estate taxes, you will also pay these to your state.
Colorado repealed its inheritance tax in the mid ‘70’s as part of the federal revenue sharing program and due to TABOR has never brought it back.
So, my first year as a wills and trusts lawyer, if someone had more than $67,000 in property, their estate would owe a federal estate tax. This meant that almost every person had a taxable estate because the exemption was so low. More importantly, back in the late 1970’s, the surviving spouse also faced estate taxes. This was the case until 1981, when the unlimited marital deduction was introduced to protect surviving spouses from the federal estate tax.
The estate tax exemption started to increase, reaching $600,000 in 1987 and then $14.7 million in 2025. The exemption will be $15 million per person beginning January 1st, 2026. Even though the estate tax exemption grew to unprecedented levels, income taxes never offered similar protections. For a married couple in 2026, the first $30 million of their property will not be exposed to the federal estate tax!
The federal estate tax exemption is why there are 15 million reasons that estate lawyers now focus more on income taxes than the estate tax.
