My business is set up as an LLC. I bought a num. of rental properties and put on my books. I am told that as I purchase more properties I should set up additional LLC's for liability purposes. Does anyone have any insight into forming a Series LLC?
Pulled article below off the web at http://www.llclawmonitor.com/2...
Sounds interesting, if your state is one of the nine states that recognize them. But I have no idea how well (if at all) they have withstood court challenges. To me, it sounds like a legal gimmick that some judge will knock down pretty soon. I just can't see courts allowing LLC members to pick and choose which assets within the same entity are protected from which creditors.
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Texas has joined the seven other states that have authorized series LLCs. The Texas bill authorizing series LLCs was signed by Governor Perry in May and will become effective on September 1, 2009. S.B. 1442. The states that currently authorize series LLCs are Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee and Utah.
Most state LLC acts allow an LLC to provide for classes of members with different member rights per class. But a series LLC can go further by establishing multiple series of assets, members and managers. The debts and obligations of a series will be enforceable only against the series’ assets, and will not be enforceable against the other series in the LLC or against the LLC generally, and vice versa. The members associated with a series can be given separate rights and duties with regard to the assets of the series.
The separation of assets and partitioning of liabilities between series, all within one LLC, can avoid many of the inefficiencies and costs associated with multiple related entities. For example, a series LLC could be used to hold multiple parcels of real estate, each in a separate series and all within the one LLC. Or, separate divisions of a business could be held by one LLC, but with each division in a separate series.
