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If you have had a loved one pass away, then you may have heard about taxation on the inheritance you receive. The main form of taxation is an estate tax. Estate taxes, as defined by the Colorado General Assembly, are those assessed when assets are transferred upon the death of a person. Until 2004, Colorado had an estate tax, but due to changes in federal laws, that tax was eliminated. Only about one-fourth of all states impose estate taxes due to the changes made by the federal government to the tax laws. Of course, future changes could reinstate the tax, and the federal government still charges estate taxes, so you may have to pay them in some form.
There are other taxes that may be levied against an estate. These include inheritance and gift taxes. Estate taxes are paid by the estate, but these other taxes would be paid by you if you inherit anything from an estate. However, the inheritance tax in Colorado was replaced by an estate tax in 1980, and as you now know, in 2004, the estate tax was eliminated, so you will not pay either to the state.
The federal law puts a cap on the total amount of taxes that can be charged by the state or federal governments. This limit allows you to receive up to $5.43 million in gifts during your lifetime without having to pay tax. This was the limit in 2015; it is adjusted each year. This information is only intended to educate and should not be interpreted as legal advice.