Estate plan updates are vital to protecting loved ones and your assets.

What comes to mind when you consider risky behavior?

Tom Cruise in "Risky Business"?

I digress.

Perhaps you think of climbing a mountain without ropes.

Maybe you envision people parachuting out of perfectly good airplanes.

You likely believe few people choose high stakes behaviors.

According to a recent CNBC article titled “Be sure to keep your will or estate plan updated. Here are 3 key reasons why,” many people have hazardous estate planning behaviors.

Unlike skydiving, making estate plan updates is a low risk behavior.

The results of a 2021 Gallup poll showed only 46 percent of adults in America have a last will and testament.

Whaaat?

This adds up to quite a few people placing themselves, their assets, and their loved ones in a precarious position.

Perhaps, you are thinking you are fine.

You vaguely remember a time where you met with an attorney and signed documents in front of a few witnesses.

You may want to think again.

Estate planning documents have a "shelf life," much like the canned refried beans in your pantry.

As laws and life circumstances change, so should your estate plan.

Estate plan updates should occur after the birth or adoption of children and after marriage, divorce, or remarriage.

Did your financial status change significantly through lottery winnings or an inheritance?

If yes, you may need to revise your tax planning and your asset allocation.

Estate plan updates are also necessary after laws have been changed at the federal or state level and if you have moved to another state.

When you review your last will and testament, you can choose to make adjustments to your heirs, change your executor, or even add a guardian.

Your executor will need to be capable of settling your estate when you die.

This includes tasks like paying debts, liquidating assist, paying taxes, selling the home, and distributing inheritances to heirs.

Nominating a guardian is important for those with minor children because this allows for you to select a trusted family member or friend to rear your little one should something happen to both parents.

Your estate plan updates also should include a review of your incapacity planning documents.

You may no longer trust the individuals who you assigned to serve as your financial and medical power of attorney agents.

Another reason could be these individuals have died or moved.

You may even have changed your wishes regarding end-of-life treatments.

Reviewing your estate plan also includes your assets with beneficiary designations.

Examples of these include life insurance policies, 401k plans, and IRAs.

If your relationships with your current beneficiaries have changed, then you will want to update such designations as well.

Your last will and testament does not supersede these designations.

If your ex-spouse was the original beneficiary, he or she will receive these assets if you do not update these documents.

What happens if you do not list someone on your beneficiary account or if the beneficiary precedes you in death without a contingent listed?

These assets will move directly to probate.

You should also review your bank accounts to determine whether you listed someone as a pay-on-death account beneficiary or whether these funds will be governed by your last will and testament.

While you are at it, you may decide it is time to upgrade to a revocable living trust-based plan and avoid probate.

Estate plan updates are certainly multifaceted.

Prioritizing them now reduces the risk of related problems for you and your loved ones.

Reference: CNBC (Jan. 27, 2022) “Be sure to keep your will or estate plan updated. Here are 3 key reasons why”