10 Tips to Build a Tax-Wise Future

It’s Not All About Taxes… Just Most of the Time!

At Safe Harbor, we know taxes might not be the first thing on your mind when you think of estate planning—but ignoring them could cost your loved ones dearly. With some major changes expected soon, now is the time to take a fresh look at your plan.

Tanda Eidsvoog, Safe Harbor Estate Law Attorney, recently attended a Continuing Education class on the National Academy of Elder Law Attorneys’ Top 10 Tax Tips.

Here’s what they mean for you, and why they matter:

Big Changes Are Coming in 2026!

In 2026, the current high federal estate, gift, and generation-skipping tax exemptions are expected to be cut in half. Right now, a married couple can pass on nearly $28 million tax-free—but that could drop to around $14 million. Minnesota update from Safe Harbor: In Minnesota, estate taxes are imposed on estates over $3 million, so in Minnesota. Many more people need to be concerned about estate taxes. There is also a bill proposed in the Minnesota legislature to modify the portability rules for married couples to be more similar to the federal portability rules for estate taxes. We will keep you updated on the tax law changes.

👉 Why it matters to you:

Even if your estate isn’t worth that much today, it may be in the future (especially if you own real estate, a business, or have investments). Acting now could lock save your heirs millions in future estate taxes.

Step-Up in Basis Can Save Heirs Thousands

When someone passes away, many assets (like a house or stocks) get a “step-up in basis”—meaning their tax basis value resets to what they were worth at the time of death.

👉 Why it matters to you:

If your children inherit your house and later sell it, the step-up could eliminate a huge capital gains tax bill. Without it, they might owe taxes on decades of appreciation. Careless planning (like gifting the house before death) could make them lose that step-up—and owe far more to the IRS. Let us help you weigh all the factors to create a gifting and estate plan that maximizes your assets for your loved ones.

Capital Gains Taxes: Sell Smart, Gift Smarter

The top capital gains tax rate is currently 20%, not taking into consideration alternative minimum taxes. That doesn’t include state taxes or the 3.8% surtax for higher earners. Selling appreciated assets now might make sense, especially if rates go up in the future.

👉 Why it matters to you:

Selling at the wrong time—or holding assets until your income spikes—can increase your tax bill. In some cases, it may be better to gift assets to children or grandchildren in lower tax brackets, who can then sell them and pay less tax. Strategic planning can mean more money stays in the family.

Gift Tax Exclusion ≠ Medicaid Gifting

You can give $19,000 per person per year (or $38,000 per couple) without triggering federal gift taxes—but Medicaid rules don’t follow the same playbook. Once the $19,000 per recipient is exceeded, a gift tax return must be filed with your income tax return, for most gifts. College and medical payments are not taxable gifts when made properly.

👉 Why it matters to you:

Many people try to “spend down” their estate to qualify for Medicaid, but gifting too much too fast can create a penalty period and delay eligibility. Talk to us before you gift, especially if long-term care may be on the horizon.

529 Plans: Give Big for Education, Get a Tax Break

You can front-load five years’ worth of annual gifts into a 529 education plan—up to $95,000 per child (or $190,000 for a couple)!

👉 Why it matters to you:

These accounts grow tax-free and can now even be rolled into a Roth IRA under new rules. It’s a smart way to invest in your grandchild’s future while lowering the size of your taxable estate.

Social Security Tax Traps

Up to 85% of your Social Security can be taxed, depending on your income—including IRA withdrawals, savings bond cash-outs, and Roth conversions.

👉 Why it matters to you:

You might think your Social Security is tax-free—until a big withdrawal bumps your income and triggers unexpected taxes. A good plan spaces out income and helps avoid surprise tax bills in retirement.

Bunching Deductions Can Save More Than You Think

With higher standard deductions, many retirees don’t itemize anymore. But if you group medical expenses or charitable gifts into one year, you may qualify to itemize—and save.

👉 Why it matters to you:

Let’s say you donate $8,000 each year but fall below the itemizing threshold. Instead, donating $16,000 every other year could get you that deduction—and increase your tax savings without changing the total amount you give.

The Clock Is Ticking on Lifetime Gifting

The current lifetime federal gift tax exemption is nearly $15 million—but it may drop to about $7 million in 2026. Gifts made before the law changes won’t be “clawed back.” Even if your estate is not subject to estate taxes, it may make sense to gift strategically in 2025 for tax reasons or long-term care planning reasons.

👉 Why it matters to you:

If you want to transfer wealth to your children or grandchildren, doing it now can remove those assets (and their future growth) from your taxable estate. That could mean millions in tax savings over time—and more flexibility for your family.

Roth IRAs: Not Always Tax-Free

While Roth IRAs generally offer tax-free withdrawals, that’s only true if certain rules are met—especially the five-year rule and age requirements.

👉 Why it matters to you:

Pulling funds too early or without proper documentation can trigger taxes or penalties. Knowing the rules can help you make the most of your retirement savings—and avoid unpleasant surprises.

End-of-Life Tax Planning Makes a Big Difference

Final-year tax returns are complex. Medical bills, unpaid taxes, last-minute gifts, and inherited retirement accounts all have specific tax rules.

👉 Why it matters to you:

If your estate doesn’t handle these correctly, your heirs could pay more than necessary—or miss valuable deductions. Special needs planning, in particular, has major tax and benefit implications. The right plan preserves benefits and avoids costly mistakes.

Bottom Line:

Smart tax planning isn’t just about numbers—it’s about peace of mind for you and protection for your family. The sooner you act, the more options you have. Don’t wait until 2026 to discover what could’ve been done.

Need a fresh look at your estate plan or want help planning ahead to reduce taxes?

We’re here to make it simple, compassionate, and tailored to you. Call us today.