Trusts & limited liability companies (LLCs) are legal structures used to manage assets. However, they differ significantly in purpose, structure and functionality.

Trusts Overview

• Typically used in estate planning
• Assets are distributed to beneficiaries
• Provides tax advantages
• Helps avoid probate
• Grantor creates the trust
• Trustee manages the trust
• Beneficiary receives the benefits of the trust
• Manages charitable donations

LLC Overview

• Provides liability protection for its owners and members
• An entity owned by one or more members
• Usually has an operating agreement
• Allows flexibility in taxation and management
• Owns the assets of the LLC
• Shields personal assets from business debts or lawsuits
• Holds real estate

When insuring a trust or LLC, it is important to gather information and take the following steps to help secure adequate coverage:

• Acquire full name and address of trust/LLC
• Determine who the members are and what their roles are
• Most carriers will send a questionnaire for completion to ensure it is not set up for business purposes and are solely to shield from a tax/liability standpoint
• Determine if the trust/LLC is listed as an additional insured, granting both the customer and the entity liability coverage

Personal Insurance Team