What Estate Planning Documents Should You Update for 2026?

The year 2026 represents a major horizon line for families and individuals engaged in wealth preservation and legacy building. While estate planning is often viewed as a “set it and forget it” task, specific legislative timelines dictate when a review is necessary. The primary driver for this urgency is the scheduled sunset of the Tax Cuts and Jobs Act (TCJA) provisions.

Unless Congress acts to extend current laws, the federal estate tax exemption—the amount an individual can pass to heirs without incurring federal estate taxes—is set to revert to pre-2017 levels, adjusted for inflation. This effectively cuts the exemption amount in half. For many families in Greenville and throughout South Carolina who previously thought their estates were well below the taxable threshold, this change could unexpectedly expose their assets to significant federal taxation.

How Does the “Sunset” Provision Impact Your Existing Will?

Your Last Will and Testament is the foundation of your estate plan, but it may contain formulas or clauses tied to tax laws that are about to change. Many wills drafted years ago include “funding formulas” for testamentary trusts. These formulas often direct the maximum amount that can pass tax-free into a trust for family members, with the remainder going to a spouse.

Because the exemption amount is currently very high, a formula based on the “maximum exemption” might accidentally disinherit a surviving spouse by funneling the entire estate into a trust for children. Conversely, if the exemption drops in 2026, a formula designed for today’s laws might result in an unexpected tax bill.

When reviewing your Will for 2026, consider these factors:

Executor Appointments: Ensure the person named to manage your estate is still willing, able, and located conveniently to handle South Carolina probate requirements.
Guardianship: If you have minor children, verify that the named guardians are still the people you trust most with their care.
Asset Distribution: Does the distribution of assets reflect your current wishes and the current value of your property?
Tax Clauses: Have a knowledgeable attorney review tax allocation clauses to ensure they function correctly under a lower exemption regime.

Why Should You Revisit Your Revocable Living Trust?

A Revocable Living Trust is a powerful tool for avoiding probate in South Carolina, maintaining privacy, and managing assets during incapacity. However, a trust is only effective if it is properly funded and updated. If you created a trust several years ago but have since purchased a new home, opened new investment accounts, or acquired business interests without retitling them in the name of the trust, those assets may still end up in probate court.

For South Carolina residents, specific attention should be paid to the following:

Real Estate: Ensure all deeds for properties in Greenville or elsewhere in the state are recorded in the name of the trust.
Successor Trustees: Review who will step in if you become incapacitated or pass away. Are they still the right choice?
Distribution Rules: Does the trust protect beneficiaries from their own potential creditors, divorce, or poor spending habits?
Incapacity Planning: Does the trust have clear instructions for your care if you are unable to manage your own finances?

Is It Time to Consider an Irrevocable Trust (SLAT or ILIT)?

For those with substantial assets who wish to “lock in” the current high estate tax exemption before it potentially disappears in 2026, the Revocable Trust may not be enough. Irrevocable trusts are distinct because they remove assets from your taxable estate entirely. Once the 2026 sunset occurs, the opportunity to move large amounts of wealth tax-free may be significantly reduced.

Two specific types of trusts are often utilized in this environment:

Spousal Lifetime Access Trust (SLAT): This allows one spouse to gift assets to an irrevocable trust for the benefit of the other spouse. It removes the assets from the donor’s estate while allowing the family to retain some access to the funds through the beneficiary spouse.
Irrevocable Life Insurance Trust (ILIT): Life insurance proceeds are generally included in your taxable estate. An ILIT can own the policy, keeping the death benefit outside of your estate and providing tax-free liquidity to pay estate taxes or debts.

Creating these vehicles requires time and precise drafting. Waiting until late 2025 to begin this conversation may result in missed opportunities due to the complexity of the legal work and the administrative steps required to fund the trusts.

Are Your South Carolina Powers of Attorney Up to Date?

A Durable Financial Power of Attorney allows you to designate an agent to handle your financial affairs if you are unable to do so. In South Carolina, the laws regarding these documents have evolved. If your Power of Attorney is older, financial institutions may be hesitant to honor it, fearing liability or obsolescence.

The South Carolina Uniform Power of Attorney Act provides a statutory framework for these documents. A comprehensive Power of Attorney should explicitly grant your agent the authority to handle specific tasks that may be necessary for tax planning or long-term care planning.

Key powers to look for include:

Gifting Authority: Does the document allow your agent to make gifts? This is often necessary for Medicaid planning or reducing estate taxes.
Trust Powers: Can your agent create or fund a trust on your behalf?
Real Estate Transactions: Is the authority to sell or manage real estate explicitly stated?
Beneficiary Changes: Does the agent have the power to change beneficiary designations on retirement accounts or insurance policies?

Without a valid, up-to-date Power of Attorney, your family might be forced to seek a conservatorship through the Probate Court, which is a public, time-consuming, and expensive process.

Do Your Health Care Documents Reflect Your Current Wishes?

Medical directives are a vital component of a complete estate plan. In South Carolina, there are two primary documents to consider: the Health Care Power of Attorney and the Declaration of a Desire for a Natural Death (commonly known as a Living Will).

The Health Care Power of Attorney appoints a specific person to make medical decisions for you if you cannot communicate. The Living Will allows you to state your preferences regarding life-sustaining procedures, such as artificial nutrition and hydration, in terminal situations.

Review these documents to ensure:

Agent Availability: The person you named five or ten years ago may no longer be the best person for the job due to age, health, or location.
HIPAA Authorization: Ensure your documents include current HIPAA releases so your agents can access your medical records and speak with doctors.
Religious or Personal Preferences: Have your views on end-of-life care changed? Your documents should reflect your current values.

Why Must You Review Beneficiary Designations Immediately?

Beneficiary designations on assets like 401(k)s, IRAs, life insurance policies, and annuities often override what is written in your Will or Trust. This is a common area where estate plans fail. If your Will says “everything to my spouse” but your IRA still lists your ex-spouse or a deceased parent as the beneficiary, the IRA administrator is legally required to pay the person named on the form.

The passing of the SECURE Act also changed the rules for how inherited retirement accounts must be distributed. Most non-spouse beneficiaries must now deplete an inherited IRA within ten years. This has significant tax implications for your heirs.

Check the following designations:

Primary Beneficiaries: Are they correct and living?
Contingent Beneficiaries: Who receives the asset if the primary beneficiary predeceases you?
Trusts as Beneficiaries: If you named a trust as a beneficiary of a retirement account, the trust language must be carefully drafted to accommodate the ten-year payout rule to avoid negative tax consequences.

How Can Gifting Strategies Help You Prepare for 2026?

Proactive gifting is one of the most effective ways to reduce the size of a taxable estate before the exemption drops. By moving assets to the next generation now, you not only remove the value of the gift from your estate but also all future appreciation on that asset.

You can utilize the annual gift tax exclusion to give a set amount to as many individuals as you like each year without reporting it to the IRS. For married couples, this amount can be combined to double the impact.

Strategies to consider include:

Cash Gifts: Simple transfers to children or grandchildren.
Educational Payments: Paying tuition directly to a school does not count toward your annual exclusion or lifetime exemption.
Medical Payments: Paying medical bills directly to a provider is also exempt from gift taxes.
529 Plans: Front-loading contributions to college savings plans for grandchildren.

Using these exclusions year over year can significantly lower your taxable estate over time, mitigating the impact of the 2026 sunset.

Why is Medicaid Planning Different from Tax Planning?

While the 2026 tax sunset is a major concern for high-net-worth individuals, many South Carolina seniors are equally concerned about the cost of long-term care. Medicaid planning focuses on eligibility for government benefits rather than estate tax reduction. The rules for Medicaid are strict, particularly regarding assets and income.

South Carolina imposes a five-year “look-back” period on asset transfers. If you give away assets to your children to qualify for Medicaid within five years of applying, you may face a penalty period where you are ineligible for care.

Documents and strategies to review for Medicaid purposes include:

Qualified Income Trusts (Miller Trusts): Necessary if your monthly income exceeds the Medicaid cap.
Medicaid Asset Protection Trusts: A specific type of irrevocable trust designed to start the five-year clock while preserving the home or other assets.
Caregiver Agreements: Formal contracts to pay a family member for care, which can help spend down assets legally.

It is vital to distinguish between gifting for tax purposes and gifting for Medicaid purposes, as they have different rules and consequences.

What is the Role of a Fiduciary in Your 2026 Plan?

A fiduciary is an individual or institution you entrust with legal power over your assets or well-being. This includes your Personal Representative (executor), Trustee, and agents under Powers of Attorney. The choice of a fiduciary is often more important than the documents themselves.

As you approach 2026, evaluate your fiduciaries:

Competence: Do they have the financial acumen to manage the complexities of your estate?
Integrity: Can you trust them implicitly to act in your best interest?
Age and Health: Are your named fiduciaries aging alongside you? It may be time to name a younger generation or a professional fiduciary.
Relationship: Has the family dynamic shifted? Conflict between siblings is a common issue when one is named trustee over the other.

Why Is Updating Digital Asset Access Necessary?

In the modern era, a significant portion of our lives exists online. From cryptocurrency and online banking to social media accounts and photo storage, digital assets are part of your estate. South Carolina law recognizes the need for fiduciaries to access these assets, but standard forms may not be specific enough.

Your estate plan should include:

Digital Asset Authorization: Specific language in your Will and Power of Attorney granting authority to access digital devices and accounts.
Inventory of Digital Assets: A secure list (kept separate from the Will) of accounts, usernames, and passwords.
Legacy Contacts: Designating legacy contacts on platforms like Apple, Google, and Facebook.

Without these provisions, your family may be locked out of valuable or sentimental accounts forever.

When Should You Start the Review Process?

Waiting until December 2025 to address these issues is a risk. Estate planning attorneys, financial advisors, and accountants will likely be inundated with requests as the sunset deadline approaches. Trust administration, asset retitling, and obtaining valuations for complex assets take time.

Starting the review process now allows for:

Thoughtful Decision Making: You have time to consider who should inherit what and who should manage it.
Asset Valuation: Appraisals for businesses or real estate can be completed without a rush.
Stress Reduction: Knowing your plan is ready for 2026 provides peace of mind.

Securing Your Legacy in South Carolina

The shifting legal landscape leading up to 2026 presents both a challenge and an opportunity. By taking proactive steps to update your Wills, Trusts, and Powers of Attorney, you can protect your family from unnecessary taxes, probate complications, and administrative burdens. A well-crafted estate plan is a living strategy that evolves with the law and your life. At the DeBruin Law Firm, we are dedicated to helping Greenville families navigate these complex changes. We can analyze your current documents, explain how the 2026 laws affect your specific situation, and design a plan that secures your legacy.

If you are ready to ensure your estate plan is prepared for the future, please contact us at (864) 982-5930 or complete our online contact form to schedule a consultation.