I Can Save You Somewhere Between $99 and $500 on a $99 to $500 Will. Don’t Bother Getting One.

There is no such thing as a “Simple Will”.

Well, that’s not entirely true. You can write your Will on a napkin – “I leave everything to my wife / husband” – and I guess that would fit the “Simple Will” definition, and in some states it would even be legal. If you have no life insurance, no children, no assets, that Will (or none at all) is probably sufficient. Don’t bother going online or to a “Will party” (kind of like Tupperware, or jewelry, or Avon, or unmentionables) where you’ll pay somewhere between $99 and $500 for a Will you probably don’t need. See – I’m fulfilling my money saving promise already and we’re only 1 paragraph in!!

Even if you do have some assets – a jointly owned house, a joint bank account, even an investment account or some life insurance – as long as those assets are titled properly (joint tenants with rights of survivorship, for example) or have beneficiaries properly named (whoever you want them to be as long as they are over 18 years old), you still might not need a Will (those are called “non-probate” assets, and pass to the other owner, or the beneficiary, automatically upon your death, regardless of what your Will states). Besides those assets, you can write a brief letter leaving your beer can collection to your old college buddy and that picture of you with your brother and Bruce Springsteen to your brother (or Bruce – totally up to you).

However, when you have kids, a good life insurance policy, or some assets solely in your name, everything changes. The napkin, the $99 Will, and even the $500 Will are likely no longer sufficient to do what you are likely trying to accomplish. Here are just a few reasons why:

1. Your child, if he or she is a minor, cannot be the beneficiary of any of your insurance policies, investment accounts, bank accounts, or other assets. If he or she is, the state will take the money and appoint a guardian (also known as a conservator) for the assets until the child turns 18. On their 18th birthday, they will get handed a very large check. I can assure you that there is no better way to dissuade a child from going to college than by handing them a very large check on their 18th birthday. This can easily be prevented by placing the money into a trust for your child with a trustee that you name to manage the assets and distribute them as you see fit . While you’re at it, you can also name a guardian for your child just in case something happens to both you and your spouse. That way, you get to decide who raises (or doesn’t get to raise) your child, rather than letting members of your family and your spouse’s family fight it out in court.

2. Your spouse will receive all of your assets. After an undoubtedly long grieving period, he or she may decide to get remarried, at which point the only logical thing to do will be to open a joint bank account with the new Mr. or Mrs. Wonderful. Should your spouse die before Mr. or Mrs. Wonderful, Mr. or Mrs. Wonderful will probably be the beneficiary of all of that money – and it will be solely at his or her discretion whether your children ever see a dime of it. Or , if they should get divorced, those assets could get split as part of their marital estate. Again, this can easily be prevented with some simple planning, which will ensure that your children receive any wealth not spent by your former spouse and his or her new spouse (and if you want, you can even prevent them from blowing all of your money on bottles of champagne to celebrate their love).

3. Taxes! In NJ, the estate tax kicks in for any estate valued at over $675,000. You would be surprised how quickly an estate can hit that figure (add up the equity in your home, your 401K, any other investment assets, any other physical assets, and your life insurance policies, and you’re likely there or exceeding it). Upon your death, there is no tax paid on any assets passing to your spouse (its called the spousal exemption – just one of the benefits of marriage!). Upon your spouses death, however, the state government gets to take a bite of every dollar over $675,000 and the federal government gets to take a bite out of every dollar over $5,120,0000 (and this number is scheduled to drop to $1,000,000, with the top tax rate going from 35% to 55%, in 2013). There are many ways to shelter a portion of your assets from moving into the taxable estate of your spouse, thus preserving more money for your children and keeping it out of the hands of Uncle Sam. You aren’t going to get that with a $99 Will.

Some people really don’t need a Will at all – they just need to title assets properly, name beneficiaries where they can, skip having kids (or be comfortable leaving them nothing), and stay under the federal and state estate tax exemptions. These people don’t even need the $99 Will – just save your money and skip it – you’re probably OK without it.

However, if you have kids to whom you would like to leave assets, if your net worth falls above the estate tax exemptions (don’t forget to include life insurance), or if you want to protect the assets you leave behind to your spouse from divorce, creditors, or lawsuits, you should absolutely have a Will – and the $99 one (and even the $500 one) likely won’t cut it when you need it most.