5 Estate Planning Moves to Make in 2026: A Connecticut Guide

The new year brings important opportunities for Connecticut families to protect their legacies. With estate tax exemptions increasing to $15 million per person and Connecticut’s unique tax rules, 2026 is the year to review your plan. These five strategic moves help Connecticut families maximize protection and minimize taxes. 

Why 2026 Matters for Connecticut Families

Connecticut’s estate planning landscape changed January 1. The estate tax exemption increased from $13.99 million to $15 million per person ($30 million for couples), matching the federal exemption. 

Connecticut creates unique challenges. The state doesn’t allow “portability” between spouses – unused exemptions vanish at death. Connecticut also remains the only state with both estate and gift taxes, complicating wealth transfers. 

With Connecticut’s 12% estate tax above $15 million, plus federal rates up to 40%, estates exceeding both thresholds face 47.2% combined taxation. Strategic planning saves families hundreds of thousands or millions. 

1. Review and Update Beneficiary Designations

Beneficiary designations on retirement accounts, life insurance, and payable-on-death accounts supersede your will. These control where assets go regardless of what your estate documents say. Yet most families haven’t reviewed designations in years. 

Why this matters: Connecticut’s lack of portability demands careful coordination between spouses. Retirement accounts are particularly important because beneficiaries pay income tax on distributions, creating double taxation for large estates. 

Action steps: 

• Review all retirement account beneficiaries (401(k)s, IRAs, pensions) 

• Update life insurance policy beneficiaries 

• Check payable-on-death and transfer-on-death designations 

• Confirm contingent beneficiaries are current 

• Consider trusts as beneficiaries for minor children or special needs beneficiaries 

Connecticut consideration: If your estate approaches $15 million, work with your attorney to determine whether direct beneficiary designations or estate beneficiaries better serve your tax planning. 

2. Leverage Strategic Gifting

The annual gift tax exclusion remains $19,000 per recipient in 2026 ($38,000 for couples). Give this amount to unlimited recipients yearly without using lifetime exemption or triggering gift tax. 

Why this matters: With exemptions at historic highs, strategic gifting removes appreciating assets from taxable estates. However, Connecticut uniquely taxes lifetime gifts, requiring careful planning. 

Action steps: Make annual exclusion gifts before December 31 ($19,000 per person, unlimited recipients). Consider larger gifts using lifetime exemption if your estate exceeds $15 million. Fund 529 plans for grandchildren (five years of gifts allowed at once). Pay medical and educational expenses directly to providers (unlimited exclusion). Document all gifts properly. 

Connecticut consideration: Connecticut taxes gifts exceeding lifetime exemption at 12%, plus potential federal tax. Structure gifts to maximize benefits while avoiding Connecticut’s unique exposure. 

3. Update Estate Planning Documents

Documents may be outdated due to life changes or law changes. Connecticut has specific requirements that DIY or out-of-state forms often don’t meet. 

Why this matters: Documents created before 2023 may contain unnecessary tax provisions. Recent retirement account rule changes also warrant review. 

Essential documents: 

Will: Ensure it reflects current wishes, names guardians, and designates an executor. Review whether estate tax provisions are still necessary. 

Revocable Living Trust: Consider whether a trust makes sense for avoiding probate, maintaining privacy, and incapacity planning. 

Durable Power of Attorney: Designate someone for financial matters if incapacitated. Connecticut requires specific language. Include digital assets, tax matters, and gifting authority. 

Healthcare Directive and Proxy: Outline medical preferences and designate decision-makers. Connecticut recognizes both living wills and healthcare proxies. 

HIPAA Authorization: Ensure providers can share medical information with designated individuals. 

Connecticut consideration: Connecticut requires specific witnesses and formalities. DIY documents often don’t comply, creating probate problems. Work with a Connecticut estate planning attorney. 

4. Review Trust Structures for Tax Planning

Connecticut’s unique tax landscape makes trust planning complex but valuable. Lack of portability and combined federal-state tax create challenges sophisticated trusts solve. 

Why this matters: The increased exemption may simplify some plans, but families approaching $15 million need structures maximizing both spouses’ exemptions despite no-portability rules. 

Key strategies: 

Spousal Lifetime Access Trusts (SLATs): One spouse gifts assets to an irrevocable trust benefiting the other, removing assets from both estates while maintaining indirect access. 

Credit Shelter Trusts: Maximize both exemptions despite no portability. First spouse’s assets up to the exemption fund a trust, removing them from the surviving spouse’s estate. 

Irrevocable Life Insurance Trusts (ILITs): Keep insurance proceeds outside taxable estates. For families with significant insurance, this saves hundreds of thousands. 

Special Needs Trusts: Protect assets for beneficiaries with disabilities without jeopardizing government benefits. 

Connecticut consideration: Connecticut’s 12% estate tax makes trust planning valuable for estates in the $15-30 million range. Combined tax exposure creates strong incentives for irrevocable trusts, balanced against income tax considerations and loss of step-up in basis. 

5. Plan for Digital Assets and Modern Healthcare

Modern estate planning includes digital assets – cryptocurrency, social media, cloud-stored photos—and updated healthcare directives reflecting current medical technologies. 

Why this matters: Connecticut law addresses digital assets through the Uniform Fiduciary Access to Digital Assets Act, but without planning, families face lengthy court proceedings for access. 

Digital asset planning: Document cryptocurrency holdings, online financial accounts, social media preferences, email accounts, cloud storage (Google Drive, Dropbox, iCloud), and business websites. Create secure password storage. Ensure your power of attorney and will specifically address digital assets—terms of service often override state law. 

Healthcare planning: Beyond basic proxies, specify preferences for life support, feeding tubes, ventilators, organ donation, pain management, dying at home, and mental health treatment. Include religious or spiritual considerations. 

Connecticut consideration: Connecticut allows multiple healthcare agents acting jointly or successively. Many families name adult children as co-agents. For digital assets, Connecticut requires explicit authorization in documents for fiduciary access to certain accounts. 

Understanding Connecticut’s Unique Rules 

No Portability: Surviving spouses can’t use a deceased spouse’s unused exemption. Plan carefully using trusts. 

Dual Taxation: Combined federal-Connecticut tax reaches 47.2% on amounts exceeding both exemptions. 

Gift Tax Trap: Connecticut taxes lifetime gifts over $15 million at 12%, plus gifts are added back to your estate at death. 

Title 19/Medicaid: Coordinate Medicaid planning with estate planning for long-term care concerns. 

Your 2026 Action Plan 

January-February: Schedule estate planning review, gather documents, list assets with values, review beneficiary designations, discuss wishes with spouse/partner. 

By March 31: Update outdated documents, create missing documents, make annual exclusion gifts, review trusts with attorney and advisor. 

Before Year-End: Make additional gifts, consider larger gifts if estate approaches $15 million, update digital asset inventory, ensure proper document execution, communicate plan with family. 

Professional Guidance Matters 

Estate planning protects your family, preserves values, and creates peace of mind. Connecticut’s unique tax landscape makes professional guidance valuable. The increased exemption and updated tools make 2026 ideal for strategic protection. 

Ready to protect what matters most in 2026? Our estate planning team, including Attorney Patrick Prue with 20+ years as a probate judge, provides comprehensive guidance throughout eastern and central Connecticut. Contact The Prue Law Group at (860) 423-9231 or visit pruelawgroup.com. 

---

Sources: 

Connecticut Department of Revenue Services. “Estate and Gift Tax Information.” https://portal.ct.gov/drs/individuals/individual-income-tax-portal/estate-and-gift-taxes/tax-information  

Nirenstein, Horowitz & Associates. “IRS Announces Increased 2026 Estate Tax Exclusion.” December 9, 2025. https://preserveyourestate.net/blog/estate-planning/irs-announces-increased-2026-estate-tax-exclusion/  

Garfunkel Wild. “Trust & Estates Newsletter – August 2025.” August 1, 2025. https://garfunkelwild.com/insights/trust-estates-newsletter-august-2025/  

Fuchs Financial. “2025 Connecticut Estate-Tax Survival Guide.” May 23, 2025. https://www.fuchsfinancial.com/2025-ct-estate-tax/  

Tax Foundation. “Estate and Inheritance Taxes by State, 2025.” November 4, 2025. https://taxfoundation.org/data/all/state/estate-inheritance-taxes/  

Golenbock Eiseman Assor Bell & Peskoe. “Important Update: Federal Gift & Estate Tax Exemption Permanently Increased to $15 Million.” July 17, 2025. https://golenbock.com/important-update-federal-gift-estate-tax-exemption-permanently-increased-to-15-million/  

---

The Prue Law Group has served eastern and central Connecticut since 1980, providing comprehensive business law, estate planning, probate, and elder law services. Our team’s deep local knowledge and specialized expertise help business owners protect what matters most. AI may have been used for the initial research and drafting of the article. This content is intended for general informational purposes only and should not be construed as legal advice. For guidance on your specific situation, please contact our office for a consultation.