Series LLC flow of money

[NA NA]

Hi,

Imagine the following setup:

->TexasSeriesLLC that holds no assets and serves as the "parent" LLC, single member (me), member-managed, has its own EIN and bank account.

---->Cell1 - a protected series of TexasSeriesLLC that holds title to a property1, single member (me), member-managed, has its own EIN and bank account.

---->Cell2 - a protected series of TexasSeriesLLC that holds title to a property2, single member (me), member-managed, has its own EIN and bank account.


->PropMgmtLLC - separate traditional single member LLC member managed by me, has its own EIN and bank account, has a contract with Cell1, Cell2 and handles all aspects of property management for property1 and proerty2, sends monthly invoice to Cell1, Cell2 and charges a $50/month management fee for each property.

If i wanted to make an owner distribution would the flow of money be as follows:

1. PropMgmtLLC sends rental income after all expenses (including management fee) are paid to bank accounts for Cell1 and Cell2

2. Cell1 and Cell2 transfer income from their bank accounts to bank account of TexasSeriesLLC???

3. TexasSeriesLLC distributes gains to me by bank transfer 

The goal is to keep everything as separate as possible while levergaing the benefits of a series LLC. However, I am not sure if step 2 is necessary based on this structure and am wondering if CEll1, Cell2 can remit distributions directly to me since I am the only managing member for each of them?

Please advise.

Thanks.

[Mike S.]

The parent series LLC has no relationship with any of the cells except being the parent that created its children. As all your children LLC have you as a member, the money should go directly from the child to you. So property management collects all rents, pays for all expenses, and redeem the rest to the the cell 1 and 2 minus its property management fee. Cell 1 and 2 distribute its money back to you. Propertymgt llc has probably no money to distribute to you as with only $50 management fee it should barely cover its own overhead. Also the parent series LLC has no income and you will have to fund it by contributing money each year to pay for its overhead.

Would you have created each child with the parent as its sole member, then yes the flow of money could then go through the parent. Or you could have each child manager managed, with the parent being the manager and collecting a small management fee from each children.

Taxwise that should not change anything as all LLC will be disregarded as single member.