What it means
The word "testamentary" means relating to a will, and the document is what most people mean when they say "a will". It names who should inherit, who should act as executor (the person who carries out the instructions), and who should look after any young children.
A will must meet formal requirements to be valid. Usually it must be in writing, signed by the person making it, and witnessed by independent people, though the rules differ between countries and states.
Until the person dies, the will has no effect on their property. They remain free to sell assets, spend money or write a new will, and a later will normally replaces an earlier one.
A will can also create a testamentary trust, which is a trust that comes into being only on death. This is useful for protecting money for children, for a beneficiary who may not manage money well, or for a disabled family member.
After death, the will is usually submitted to a court in a process called probate, which confirms that it is valid and lets the executor collect assets, pay debts and taxes, and distribute what remains. Some assets, such as pensions or jointly owned property, may pass outside the will under their own rules.
Without a valid will, the law decides who inherits, and the result may not match the person's wishes. Business owners in particular should review their wills regularly, because company shares and loans can be complex to pass on.
In practice
Real-world examples.
Example
A shop owner writes a will leaving her business to her daughter and her savings to her son. She names her accountant as executor. When she dies, the executor values the assets, pays the debts and transfers the shares in the business to the daughter. She reviews the will every few years with her lawyer.
Example
A father with young children includes a testamentary trust in his will. The trust holds money for the children until they reach 25, with a trustee making payments for education and living costs. This keeps the money safe until they are older. The trustee reports to the family each year.
Example
A co-founder of a technology company updates his will after a funding round. He specifies who should receive his shares and asks his lawyer to check that the will fits the company's shareholder agreement. This avoids a clash between his wishes and the rights of other shareholders. He also keeps a letter of wishes with the will.
Case study
Seen in the real world.
Alderwood Family Farms is an illustrative, fictional business owned by a farmer named Mr Karimi. He had three children, but only one worked on the farm, and he wanted the land to stay in the business.
With his lawyer, he made a will that left the farm to the working child and gave the other two children cash and an investment portfolio of equal value. He also created a testamentary trust to hold part of the inheritance for a grandchild.
When he died, the executor followed the will, the farm continued to operate, and the family avoided a forced sale. The illustrative lesson is that a clear will can protect a business as well as a family. The family also kept a list of all accounts, insurance policies and business documents with the will, which saved the executor many weeks of searching.
Watch out
Common mistakes.
- Assuming that a will controls every asset, when pensions and jointly owned property often pass under other rules. Pensions, life insurance with named beneficiaries and joint accounts usually pass under their own terms, so the will may not cover them.
- Failing to update the will after marriage, divorce, the birth of a child or a change in business ownership. Life events change who should inherit and who should manage the estate, so regular reviews matter.
- Choosing an executor without asking them, or choosing someone who lacks the time or skill. The role takes time and involves legal duties, so the person chosen should be willing, organised and trustworthy.
Questions
People also ask.
Is a testamentary will the same as a living will?
No, a testamentary will deals with property after death, while a living will sets out medical wishes during life. A living will, sometimes called an advance directive, deals with healthcare decisions if you cannot speak for yourself.
Can a will be changed?
Yes, the person can change or replace it at any time while they have the mental capacity to do so. A new will or a formal amendment is needed, and making handwritten changes on the old document can cause problems.
What is probate?
It is the court process that confirms the will and gives the executor authority to settle the estate. It also lets creditors come forward and ensures that taxes are paid before assets are shared out.
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