What it means
A will sets out how your estate, meaning everything you own less what you owe, should be shared after your death. It names an executor, the person responsible for collecting your assets, paying debts and taxes, and handing over what is left to the beneficiaries (the people or organisations who receive something under the will).
It can also include specific gifts, such as a property to a child or a sum of money to a charity. Rules differ by country and region, but most places require a will to be in writing, signed by the person making it and witnessed by independent people.
A will that does not meet these formalities may be invalid. People often keep the original with a lawyer or in a secure place and tell the executor where it is.
If someone dies without a valid will, this is called dying intestate, and the law sets out a fixed order for who inherits. That order may not reflect your wishes, can cause delay and can lead to family disputes.
For people with children, business interests or property in more than one country, a will is especially important. For business owners, the will is part of succession planning.
It should work together with shareholder agreements, partnership deals and insurance, so that a sudden death does not freeze the company or force a sale. Legal advice is essential, because the interaction between a will and business documents can be complex.
A will should be reviewed after major life events such as marriage, divorce, the birth of a child or a significant change in wealth. It can usually be changed at any time while the person has the mental capacity to do so.
Out-of-date wills are a common cause of unintended results. Costs and timing are worth understanding.
Probate, the legal process of confirming a will and settling an estate, can take months or longer and may involve fees and taxes depending on the country. Careful planning, such as keeping records in order and using trusts or joint ownership where suitable, can reduce delay, but these choices should be made with proper advice.
In practice
Real-world examples.
Example
A founder with two children and a majority stake in her company writes a will naming her spouse as executor. She directs her shares into a trust so that the business can continue to be managed while the children are young. She reviews it every few years to keep it up to date.
Example
A retired teacher leaves his house to his daughter and a $20,000 gift to a local charity. He appoints a solicitor as co-executor to make sure the instructions are carried out properly. The solicitor also stores a copy and gives the executor details of how to find it.
Example
A couple who own a restaurant together make wills that give each other their shares. They also sign a partnership agreement so that the surviving partner can continue to operate the business. Life insurance on each partner is arranged to fund the purchase of a deceased partner's share.
Case study
Seen in the real world.
Calloway Plumbing is a fictional family firm owned by two brothers. When one brother died suddenly without a will, the law gave part of his shares to his widow and part to his adult children.
The surviving brother now had to run the company alongside four new shareholders who had different views about the future. Decisions slowed, and the firm lost a major contract during the dispute.
In this illustrative story, the survivor and the heirs eventually agreed to a buyout, but it took 18 months and significant legal fees. Afterwards, the surviving brother made a will, signed a shareholder agreement with a buy-sell clause and bought life insurance to fund any future purchase. The family now reviews all of its legal documents every two years.
Watch out
Common mistakes.
- Assuming that a spouse automatically inherits everything, when the law may split the estate between several people.
- Writing a will once and never updating it after marriage, divorce, children or changes in wealth.
- Using home-made wording that is unclear or fails to meet legal formalities, which can make the will invalid.
Questions
People also ask.
What is the difference between a will and a trust?
A will takes effect on death and usually goes through a court process, while a trust can be set up during life and may pass assets without that process.
Who should be my executor?
Choose someone trustworthy, organised and willing to act, and consider naming a replacement in case they cannot.
Does a will cover assets in other countries?
Not always, because rules differ, so people with overseas property usually need local legal advice.
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