27 September 2015

Multiple Business/Property Owners:  Should You Create A Series LLC?

If you own a business and/or properties, you’ve likely formed a Corporation or a Limited Liability Company (LLC).  Each option has various benefits and drawbacks. But for owners of multiple properties or businesses, the best choice may be a relatively new type of entity called a Series LLC.

With a Series LLC, each property or business can be separately owned and managed in a separate “Series” of the LLC.  Each Series of the LLC has the same characteristics as a separate and distinct LLC.  Each Series can have separate and distinct ownership and management, and the assets and liabilities of each Series are legally separate of the assets and liabilities of the other Series.  Some of the benefits of forming a Series LLC include cost-savings, asset protection, possible anonymity of the owners and flow-through tax advantages..  Owning a business or investment property in your personal name makes it easy to find the owner of the property or business during an asset search, and also exposes your personal assets to the liabilities of the business or investment real estate.  By using a Series LLC, a business owner will enjoy the legal protections of forming multiple LLCs, but will receive the cost-savings of forming a single Series LLC and designating separate Series.

A Series LLC is a relatively new vehicle available to corporate and asset protection attorneys.  Its setup is similar to a parent corporation with subsidiaries, except LLCs have more flexible ownership rules.  According to Jonathan Linnemeyer, Attorney with Lyons Law Group in Downers Grove, an Illinois statute allows for Series LLCs to be formed and remain as separate and distinct entities under the same umbrella.  “If a company places its manufacturing operation in one Series LLC and its distribution facilities in a second Series LLC, the assets of one will be protected from a lawsuit against the other, and vice versa,” said Mr. Linnemeyer.  “Not only does a Series LLC protect the owners’ personal assets from the liabilities of the business, it also insulates the liabilities of the various business divisions from one another.”  A Series LLC is also ideal for owners of multiple real estate properties.  “If one property has a tenant claim or loss,” added Mr. Linnemeyer, “the other real estate properties are secure from that claim or loss.”  

But structuring the Series LLC and titling the business or real estate assets must be done by an experienced attorney who is familiar with this type of structure.  And, while Illinois recognizes the validity of Series LLCs, not all jurisdictions in the U.S. do.  

For more information about forming a Series LLC for your business or real estate properties, please contact one of the attorneys at Lyons Law Group, LLC. (630) 852-2529

By Denise Freese