PFIN 2nd Edition by Lawrence Gitman ,Michael Joehnk,Randall Billingsley

Exercise 1

Kristen and Robert Salmon are in their mid-30s 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. Robert has $100,000 in group term life insurance and an individual universal life policy for $150,000. However, the Salmons haven't prepared their wills. Robert plans to do one soon, but they think that Kristen doesn't need one because the house is jointly owned. As their financial planner, explain why it's important for both Robert and Kristen to draft wills as soon as possible.