A series Limited Liability Company (LLC) is a relatively new and specialized form of limited liability company that offers a unique way to organize and segregate assets and liabilities into separate “series” or “pods” within a single legal entity. Each series operates almost like its own distinct entity, with its own assets, liabilities, members, and sometimes even its own business activities. The key feature of a series LLC is that the liability and obligations of each series are generally kept separate from those of the other series within the same parent LLC.
The concept of a series LLC was first introduced in Delaware to provide greater flexibility for businesses and individuals managing multiple properties, investments, or business ventures under a single umbrella entity. This structure is especially popular in the real estate industry, where investors may want to isolate the risks associated with individual properties. Currently, the are only states that have statutes providing for the formation of series LLCs are AL, AR, DC, DE, IL, IN, IA, KS, MO, MT, NE, NV, ND, OK, SD, TN, TX, VA, UT, and WY. Series LLC’s can even be of use in some states that have not enacted statues expressly allowing for their creation. Florida stands as an excellent example of this. Florida will not allow you to form a series LLC in the state, but if you’ve formed your series LLC in another state that allows them, you can register each series doing business in the state of Florida as a foreign LLC.
Series LLCs can be a powerful tool to maximize asset and liability protection while minimizing administrative costs and tasking. Just as with a traditional LLC, series LLCs must have a name reflecting their status, a registered agent, the owners must decide if the LLC and each of the series are to be member-managed or manager-managed, Articles of Organization or a Certificate of Formation must be filed with the state, a Series LLC and each of its established series will need its own EIN, an operating agreement (each series may also have its own), and bank accounts for the Series LLC and each individual series contained therein.
Although attractive for the reasons described above, the major drawback to the series LLC is that there is very little case law indicating how courts will treat these entities. This may lessen the frequency with which they are used in comprehensive Asset Protection plans until such time as consistent legal precedent has been set.
The Series LLC provides a unique yet unproven opportunity to simplify a customized Asset Protection plan. You should consult an experienced attorney to help decide whether this is an option worth considering for your unique Asset Protection needs. As always, The Presser Law Firm, P.A. is ready and would be privileged to help you navigate this option. If you would like more information on Asset Protection, please do not hesitate to contact us at (561) 953-1050 or email info@assetprotectionattorneys.com.
