LLC & Series feedback

[Joe E.]

Wanted to get some informal BP feedback on legal entities, and realize this is not legal advise.

I wanted to learn more about setting up legal entities for REI. After finding a mention of a law firm which specializes in REI law here on BP, reviewed its site & scheduled an appointment. The appointment went well, learned a fair bit, liked the overall concept which was proposed and quoted: a solution incorporating traditional LLCs, series LLCs & trusts in the $7k range.

My concerns: Series LLC have been around ~ 20 years now, and can only be formed by some US states.  As I intend to purchase properties across various states (some of which are where Series cannot be formed), I am wondering about the legal uncertainty surrounding Series as well as the potential difficulties of using it across state lines.

Thanks in advance!

[Scott Smith]

Originally posted by @Joe E.:

@Scott Smith Interesting... just recapping for my own clarification: each state as its own internal liability shield because of original LLC, but not every state recognizes Series LLC as part of that internal liability shield?

Not quite, but it is a good clarification. Every state has an internal liability shield for LLCs and that is what is analyzed in every state: the LLC Internal liability shield of the state you're being sued in. The limiting factor is that some states have not adopted the legislation to form a Series LLC within that state.

For example, if I form a Texas Series LLC and have a property in Florida held by one of the "child series," then if there is legal action the property will be analyzed against Florida's internal liability shield. There are still only a handful of states that allow the creation of the Series LLC, but you can still be protected with a Series LLC in all 50 states - it's just that the different "series" are analyzed different in different states due to their bent on the internal liability shield.