Asset Protection - LLCs

[Lisa T.]

I have spent a ton of time researching how best to structure our real estate holdings. We have them in a couple of LLCs now but want to add a holding or series LLC for asset protection as well as reduce our income tax filing fees. I've talked with several providers and most of them behave like the old stereotype of a used car salesman. It's so hard to get apples to apples comparisons. They bundle their services, in most cases, negotiate the prices so they're giving you a great deal, we're running a special right now ... you get it. I created an Excel spreadsheet and list out all the one-time expenses (set up new WY LLC, restructure existing LLCs, state filing fees, registered agent fees, warranty deed costs to transfer properties into new LLCs, etc.) I'm tired just typing that. It's taken a couple of weeks. So now that I have a way to determine the real implementation and ongoing costs of the new structure, I'm left with one question I can't find a definitive answer on but it seems like it should not be that difficult. What is the difference between a Holding LLC and a Series LLC?  (We are planning on creating one or the other in WY, you can Google why that's an advantage.  Each provider I've researched online to implement the new structure (new LLCs, warranty deeds, etc.) and/or spoken with seems to do either a series LLC or holding LLC, not both.  And most of the quick and cheap web providers (ZenBusiness, Northwest Registered Agent...including Legal Zoom) don't do either, only simple LLCs.  When a provider explains why they only will do a series LLC or holding LLC, it sounds like the two are exactly the same.  They typically have responded they can't speak to the "other" because they don't do them so a comparison remains impossible.   I've heard a couple of times the main reason providers won't do the series LLC is because it hasn't been tested in the Courts enough to know if the asset protection will hold up.

Finally my question ... Can anyone respond with a resource online?  I've found tons of information on the Series LLC but nothing that literally compares the benefits/pros/cons over the Holding LLC. 

Thanks in advance for any wisdom you can share and help me out of this rabbit hole!   :-)

[Mike S.]

@Lisa T.

If you already have your properties in local LLC why do you want to move them out to a new LLC.

Ideally you will have each property in a local LLC and this LLC will be owned by a single member that would be your holding LLC.

You would only have to create the holding LLC and then amend your local LLC to reflect the change of member.

You can create the holding LLC as a regular LLC or you can create a series LLC and use the parent of the series as the holding and keep the children LLC of the series for future properties in WY. However if you want to use a child in another state you may have issues as you would need to foreign register a child in that state. While the foreign registration should not be a problem, the lack of case law in some jurisdiction may let a judge disregard the separation of your series and reach the holding, voiding a big part of your asset protection strategy. Instead of foreign register your child you may use a local land trust or a property management company as the local entity.

The cost of creating a series instead of a regular LLC is not that different and it is a great tool to have available. But be cautious about its use as it may not be the catch all that some want you to believe.