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Estate planning is often postponed until it's too late, despite changes in tax laws or potential lawsuits. Procrastination can lead to missed opportunities for asset protection or tax savings, especially with the exemption amount set to decrease in 2026. Updating estate plans regularly is vital to reflect changes in personal circumstances and financial positions.

Outdated wills, healthcare documents, and financial powers of attorney need revising every few years to stay relevant. Additionally, the gift, estate, and GST tax exemptions will halve in 2026, making early planning essential. For instance, using spousal lifetime access trusts (SLATs) can help protect assets, but it’s best to establish these well before the exemption drops.

Moreover, inflation adjustments in tax figures offer opportunities for additional gifting. The annual gift exclusion and lifetime exemption amounts change yearly; understanding these can be crucial for estate tax reduction. Trust income tax planning is also essential, considering state tax implications and federal income tax rates.

Retirement planning should be realistic and integrated with estate planning to ensure financial stability and an accurate bequeathal plan. Addressing potential cognitive impairments by simplifying financial accounts and providing current estate planning documents can safeguard against future incapacity.

Open communication with appointed fiduciaries and heirs can clarify roles and expectations, reducing misunderstandings. Considering the risk of divorce in estate planning is increasingly important due to rising divorce rates among older adults.

State residency for tax purposes is another critical factor, especially for those with homes in multiple states. It's crucial to adhere to each state's residency rules to avoid dual taxation. Proper administration of trusts, LLCs, and other entities is vital to maintaining the integrity of the estate plan. Regular reviews ensure compliance with formalities and prevent the nullification of asset protection benefits.

Finally, having a clear succession plan for family businesses is crucial. This plan should include documented control measures and financial arrangements to ensure a smooth transition upon retirement, disability, or death.

Talley's team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.


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