Comprehensive Estate Planning for John and Sarah

John and Sarah are a married couple in their mid-50s, with a combined net worth of $5 million. They have two children, ages 21 and 24, who are both college graduates. John is a successful entrepreneur in the tech industry, while Sarah is a part-time financial consultant. They own their family home valued at $1.2 million and have diversified investments in stocks, bonds, and real estate.

Recently, John has been diagnosed with a serious health condition, prompting both him and Sarah to reconsider their estate planning strategies. They have minimal estate planning documents in place: a basic will that outlines their intentions for asset distribution but no trust structure. They are particularly concerned about the tax implications of their estate, how to provide for their children, and how to ensure their assets are distributed according to their wishes.

Considering the given scenario, outline a comprehensive estate planning strategy for John and Sarah that addresses their immediate concerns and long-term goals. Your response should cover the importance of wills and trusts, gift tax implications, the impact of their health situation, and strategies to maximize tax efficiency, while also considering the best interests of their children.