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  5. What is the difference between a will and a trust?

What is the difference between a will and a trust?

On Behalf of Ed Shaw Law | Aug 20, 2018 | Estate Planning |

A will, or “last will and testament” is a legal document that is used to transfer your belongings, money or other “assets’ to the people you name in it. A will can serve more than just that purpose, however.

A will can also be used to appoint the guardians for your minor children and to tell the court and your family whom you would like to take care of your estate or act as “executor” when you die.

A will can also be used to set up trusts for the people you would like to leave stocks, bonds, money market accounts, savings or other assets to.

  • Why a will is important: If you do not appoint a guardian and your spouse does not survive you then your surviving family will have to go to probate court and get a guardian appointed for your children. This is important to note because the person appointed may not necessarily be the same person you would like to raise your child or children.

A trust is another way to transfer your “assets” (money, IRA, 401K, jewelry, artwork, collection, vehicles, etc.) to the people after you die. Typically, a trust does not go through probate. One person, say a grandparent, may create a trust in order to leave specific items or accounts to his or her grandchildren. After his or her death, these assets will then be transferred by the person the maker of trust appoints to carry out his or her wishes. This person is called a trustee.

The trustee makes sure that all medical or other bills and debts are paid, that the funeral notice and arrangements are taken care of and that the named beneficiaries get what has been left to them in the trust. With IRAs and 401ks there is almost always a named beneficiary, but these people can also be named in the trust.

Types of trusts

There are many types of trusts but they fall into basically two categories:

  1. Living
  2. Testamentary

A trust made for the primary purpose of avoiding probate court is called a living revocable trust. It is called living because it is made while the person is still alive. It is revocable because it can be changed during that person’s lifetime.

A trust created in addendum to a will is called a testamentary trust.

Trusts typically do not go through the court and so there are no court, attorney or probate fees.

4 things a trust must have

To be valid, a trust must have:

  1. A maker (the trustor)
  2. Someone appointed to carry out the terms of the trust (the trustee)
  3. Someone named if the first trustee cannot carry out his or her duties (the successor trustee)
  4. At least one named beneficiary to the trust (the person or people who are named to receive money or other assets)

Who needs a trust? 

Trusts are not just for the very rich or the very old. Because trusts are not expensive or time consuming to create,  trusts are actually quite common for people of moderate means.

Both trusts and wills offer benefits not covered in this post. If you have questions about your specific will or trust then speak with a trusted estate planning attorney.

Why do different states have different laws?

by Edward Shaw | Jun 30, 2025 | General Law

I get asked the question all of the time, why are the laws different in each state, and, why do people need to get different lawyers when they have legal issues in other states. The answer goes back to the founding of our country, we have always had a federal system,...

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Will I lose everything in Chapter 7 bankruptcy? 

On Behalf of Ed Shaw Law | Jun 5, 2025 | Bankruptcy

Chapter 7 bankruptcy helps erase debts when you cannot pay them and give you a fresh financial start. However, many people think of bankruptcy as losing everything. Fortunately, Minnesota laws protect essential assets.  Confidence comes from knowing your rights—learn...

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What is the difference between legal and physical custody?

On Behalf of Ed Shaw Law | Apr 23, 2025 | Family Law

If you're going through a custody issue in Minnesota, it's important to understand the difference between legal and physical custody. These terms may sound similar, but they each play a different role in your child's life. Understanding legal custody Legal custody...

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JAIL PHONES

by Edward Shaw | Apr 4, 2025 | Criminal Defense

Many of you have seen movies involving phone calls from a jail or prison, maybe some of you have gotten calls from a jail or prison.  If you have, you may be familiar with the message that often plays 'This call is from a correctional institution and may be...

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EXPERT WITNESSES

On Behalf of Ed Shaw Law | Mar 27, 2025 | Firm News

Most people outside of the legal system have never heard of expert witnesses, a critical part of the legal system.  Unlike regular witnesses, who can testify about what they observed or heard, experts can offer opinions.  Experts are used to explain a variety of...

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Contracts for Deed

by Edward Shaw | Mar 12, 2025 | Business Law

They are an alternative method of financing the purchase and sale of property.  Instead of the buyer getting a bank loan, payments are made to the seller.  The arrangement has its advantages, by taking payments over time a seller can in some cases save on taxes. ...

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WHEN DO YOUR RIGHTS HAVE TO BE READ TO YOU

by Edward Shaw | Jan 31, 2025 | General Law

I have written on this topic before, but, because it is a source of a lot of misunderstanding among the general public, it needs more attention. Police shows for decades have shown people being arrested and read the Miranda warning, 'their rights', you have the right...

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When can you sue someone for something they say?

by Edward Shaw | Jan 24, 2025 | Civil Law, General Law

Free speech is a cornerstone of our society, for good reasons.  A democracy depends on people being able to express their opinions about anybody, and anything.  Even the richest and most powerful in society can be criticized by any citizen in a free society. Like all...

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MONEY AND DIVORCE

On Behalf of Ed Shaw Law | Jan 13, 2025 | Firm News

When divorces are tough there are usually issues with money.  The rules on dividing assets, money, real estate, vehicles, anything of value, are simple, it is generally divided equally, regardless of who earned it, or whose name is on it.  The exception is...

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Tips for co-parents to keep the holiday season peaceful and joyous

On Behalf of Ed Shaw Law | Dec 6, 2024 | Custody

Co-parenting presents challenges throughout the year, but the holiday season can amplify these difficulties, even for those who maintain a cordial relationship with their former spouse. From Thanksgiving through the end of the year, the added stress of coordinating...

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  • Will I lose everything in Chapter 7 bankruptcy? 
  • What is the difference between legal and physical custody?
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