diff --git a/HANDOFF.md b/HANDOFF.md
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--- a/HANDOFF.md
+++ b/HANDOFF.md
@@ -1,4 +1,26 @@
-# HANDOFF — 2026-10-22 (the creator's properties-panel asks shipped, incl. TASK 63, and pushed; the vv webcam Units 1+2 state below)
+# HANDOFF — 2026-10-26 (ai.md memory split, 3 units landed; see below — everything after this block is the prior 2026-10-22 state, still accurate)
+
+## At a glance (2026-10-26 docs session)
+- **`ai.md` is being split into `docs/ai/*.md`** (user-approved: verbatim move, staged units, "ai.md
+  only"). Three units landed as separate commits, **docs only, not pushed**:
+  `804b1d2` (frame pipeline: cadence/timing/budget/compositor/pump),
+  `096bf6d` (capture: backdrop/webcam/background effects/vertical tier),
+  `a4dfca6` (output: ffmpeg/encoder/recording/audio). Each move is byte-identical in the new file;
+  `ai.md` keeps a short stub with the load-bearing invariants + a link. `docs/ai/index.md` routes.
+  **`ai.md` is now 1,289 lines (~32k tokens), down from 2,702 (~64k)** — more than half the
+  mandatory-read cost is gone.
+- **Also landed (docs only, not pushed):** `ef60f1f` — distribution & packaging deferred until near
+  v1 (creator ruling 2026-10-26); see "Next step" below for the still-open route contradiction.
+- **Remaining split candidates in `ai.md`** (not yet moved — smaller, more interleaved with law that
+  should stay): Architecture's "Social bar" (46) + "Toast notifications" (24) + "Licensing — do not
+  violate" (60); "YouTube Live API — design constraints" incl. "Native events & alerts" (349 total,
+  99 of it alerts); "Monetization" (136); "Windows packaging & distribution" (135, frozen per the
+  deferral above). None of these is urgent — pick back up only if the user asks to continue the split.
+- **Scope-check passed on all three commits**; no source touched this session.
+
+---
+
+## Prior state (2026-10-22) — the creator's properties-panel asks shipped, incl. TASK 63, and pushed; the vv webcam Units 1+2 state below
 
 ## At a glance
 - **Branch** main, tracking `origin/main`. **The six-commit properties-panel batch is PUSHED**