David and Cheryl Allen are in their mid-30\'s and have two children, ages 8 and

Question

David and Cheryl Allen are in their mid-30's and have two children, ages 8 and 5. They have combined annual income of $95,000 and own a house in joint tenancy with a market value of $310,000, on which they have a mortgage of $250,000. David has $100,000 in group term life insurance and an individual universal life policy for $150,000. However, the Allens haven't prepared their wills. David plans to do one soon, but they think that Cheryl doesn't need one because the house is jointly owned. As their financial planner, explain why it's important for bith David and Cheryl to draft wills as soon as possible.

Explanation / Answer

A will makes it much easier for your family or friends to sort everything out when you die – without a will the process can be more time consuming and stressful. If you don’t write a will, everything you own will be shared out in a standard way defined by the law – which isn’t always the way you might want. A will can help reduce the amount of Inheritance Tax that may be payable on the value of the property and money you leave behind. Writing a will is especially important if you have children or other family who depend on you financially, or if you want to leave something to people outside your immediate family.

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