Trusts & Limited Liability Companies | High-level Overview

Personal Insurance

Trusts & Limited Liability Companies | High-level Overview

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