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Do I Need a Will, How Does a Will Work, and Other FAQs

Understanding how a will works now can make things much easier for your loved ones in the future.

Justin Cupler

Contributing Writer at Tally

November 10, 2021

We rarely want to think about our mortality, but you have to consider it regarding life insurance and a will. 

While the benefits of life insurance are clear-cut, a will isn't so cut-and-dried. There’s a lot of confusion surrounding who needs a will and how it works. 

Below, we'll answer the questions, “How does a will work?” and other frequently asked questions. 

How does a will work?

A last will and testament — typically referred to as a will — is a legal document and a key part of estate planning that outlines the distribution of a deceased person's assets. It may also appoint guardians for minors (children), if necessary. A will generally includes three key parties: 

  • Executor: The person who carries out the provisions outlined in the will

  • Beneficiaries: The people who will inherit the assets

  • Guardians: The people who will raise and care for any minor children left behind

A will is generally used to distribute assets that don't allow the direct naming of beneficiaries. These can include things like a bank account, real estate, cars and artwork. A will generally isn't necessary for assets that allow beneficiaries — such as life insurance policies, individual retirement accounts (IRAs), other retirement plans and investment accounts. 

The named beneficiary on an asset always trumps what the will requests. So, if you were to list your son as the beneficiary on your 401(k) but left it to your daughter in the will, your son would get the 401(k) if you died. 

When an executor executes a will, it must go through a legal process called probate. Probate is a probate-court-supervised authentication of your will that approves the executor you named and allows them to distribute your assets according to your will. 

First, the probate process verifies and values all your assets. Then, it pays off any outstanding debts by liquidating select assets.

After paying the debts, the leftovers are distributed to family members and other loved ones according to the will. 

Probate isn’t necessary for any asset with a named beneficiary. 

Avoiding probate

Probate can be a long, stressful process for your loved ones. It can also be an expensive process for larger estates, as some state laws allow fees based on the size of the estate. So, it's best to avoid this when possible. 

Keeping a small estate

Some state laws allow probate exemptions for small estates. Check your state laws to see the exemption levels — you may be surprised to find some exemption levels are surprisingly high. 

Distributing assets while you're alive

You can lower the size of your estate and potentially meet the probate exemption level by giving away your assets while you're still alive. This prevents the courts from getting involved, saving your loved ones money and stress. 

Creating a living trust

If you create a living trust, you place assets into a trust run by a trustee instead of you. When you die, the trustee is legally required to distribute the trust according to its terms, thereby avoiding probate.

Setting accounts to payable on death

Certain accounts will allow you to set beneficiaries and make your account payable on death (POD). POD means when you die, the assets in that account are transferred directly to the beneficiaries, bypassing the probate process. 

Owning property jointly

Creating joint ownership with a spouse or another trusted person allows the surviving spouse or trusted person to facilitate the transfer of the property outside probate. 

When should I have a will?

There is no one-size-fits-all timing for creating a will, and some personal finance experts even claim many people never need a will. It's a common misconception that you only need a will when you're wealthy. But the truth is, a will goes well beyond divvying up a multimillion-dollar estate. It also helps ensure the people you love get what you feel they deserve. 

Other than the obvious divvying up a large estate, here are a few different times a will is useful. 

You have minor children or pets

A will can define guardians for your minor children if you don't have a surviving spouse to care for them. Without this in a will, state law will decide who gets your children. The same rings true for pets — you can determine a guardian in your will. 

You have lower-value physical assets

When you die, you'll likely leave behind an assortment of lower-value physical assets, including cars, collectibles, televisions, radios and more. Without a will, dividing these assets can turn into a family feud. By listing who gets what in your will, you can avoid putting your family under this sort of pressure. 

You have a complicated family structure

Family structure can also throw things for a loop after you die. For example, if you were divorced and remarried but want your assets to go to your children from the first marriage, you may need a will to execute this. Otherwise, your state law may give your new spouse all your assets. 

What are the components of a will?

While every will varies certain aspects are common across all wills. Here are some key components of most wills

Basic overview

A will begins with a basic overview, including:

  • Your full name 

  • County of residence 

  • A declaration that this is your will

  • Marital status 

  • Children, including step-children and adopted children

Debts and taxes

The following section outlines how the executor is to handle the debts and taxes your estate owes. It’ll instruct which assets to sell to settle those liabilities. This prevents assets you planned to give away from mistakenly being sold to pay off your credit card debt. 


Asset disposition

The asset disposition section highlights who gets what assets and under what terms. For example, you can award your 401(k) balance to your kids, but only after graduating college. 


If you have pets or children, this is where you establish who would take care of them after your death. If you die intestate — when you die without a will — the state will decide who takes your children. 

Executor and trustee

In this section, you name who will manage your assets and personal property and distribute them. Then, list what powers the executor and trustee have, such as liquidating assets and settling disputes. 

No-contest provision

This section isn't required but is highly recommended. It prevents people from challenging the will's provisions and probate rulings. Anyone who contests the will is generally removed from it. 

General provisions

Anything that wasn't covered in the previous sections will go in here, such as how divorce can impact the estate. 


This section will define any terms that may be misunderstood or misconstrued. 

What do I need to make a will legally binding?

The precise laws making a will legally binding will vary slightly by state, but all wills must meet a few basic requirements

First, the testator — the person the will is for — must be of sound mind. The person cannot be incapacitated or coerced into signing the will. The testator must also be at least 18 years old. 

Second, the testator must sign the will to make it valid. Also, many states require at least two witnesses aged 18 or older to sign the will too. 

Finally, it's best to have the will notarized by a certified notary public. This generally isn't a requirement, but it can help later in the process. 

How does a will differ from a living will?

While they both have the term "will" in them, a living will is dramatically different from a last will and testament. 

While a last will and testament distributes your assets to family and friends after you die, a living will gives a person's medical requests if they’re incapacitated and cannot communicate their wishes themselves. 

For example, if a person is on life support following an accident and lacks a living will, the family decides when to take them off life support. However, with a living will, the injured person can instruct the medical team when they want to be taken off life support. 

How does a will differ from a living trust?

You can also set up a living trust to help distribute assets when you die. 

A living trust has two options: revocable living trust and irrevocable living trust. A revocable living trust is one the grantor can alter by removing assets from it whenever they like. They can even terminate a trust if they please. 

In an irrevocable trust, the grantor gives up all ownership rights once they place an asset in the trust. The grantor can remove assets and change the terms, but only with the trustee's permission. The main benefit to an irrevocable trust is that it removes the estate’s assets, helping lower estate taxes. 

There are a few key distinctions between a living trust and a will to consider when choosing a trust over a will. 

Forfeits assets while alive

When you fund the trust with assets, you’re signing over ownership of each asset to the trust. This makes it easier to transfer it into the name of the person you want to give it to after your death. However, in signing the asset over, you're forfeiting all ownership rights to it. 

If you later choose to sell the asset, you must get the permission of the assigned trustee — the person you assign to execute the trust. 

Skips probate

As mentioned before, if you set up a trust, there is no probate process. This saves your family and loved one’s money, time and stress. 

Offers more privacy

A will is a public document that anyone can view, which can be uncomfortable for many. A trust, however, is a private arrangement between the grantor (the person creating the trust), trustee (the person or entity who manages and executes the trust) and beneficiaries (the people who receive the assets from the trust). 

Make life easier for your loved ones with a will

With the answers to key questions about wills, you should have a firm understanding of how a will works and how it benefits your family. It offers clear direction for your assets after death and keeps things civil between everyone. 

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