Understanding Series LLCs - Morris Law Center

Understanding Series LLCs

A Series LLC is a type of business entity in Nevada.  Not all states have Series LLCs.  Notably, Nevada’s neighbor, California does not recognize Series LLCs.  Nevada is trying to attract businesses, so they have business friendly statutes which includes Series LLCs.  Essentially a Series LLC is an entity that you form where there is a Master LLC (with nothing in it) that holds the Series.  The Series can be described as mini LLCs.

The simplest example is if you’re a real estate investor.  Let’s say you are a real estate investor and you own 10 properties that you lease to tenants.  If you are leasing the 10 properties, you absolutely need them to be in a business entity.  You would not want to put them in just one standard LLC because you’re not limiting their liability because they’re all in the same pot. So they’re all exposed. So if one has a problem, let’s say a tenant sues you for tripping and falling, they would have to sue the LLC because the LLC would be owner of the home. However, if you’ve got all 10 properties in there, the nine other properties are going to be exposed to liability because they’re all in the same LLC. So you want to insulate the liability by making sure that each property has its own LLC.

And that’s where the series LLC comes in. Instead of having to open up 10 regular LLCs at a cost of $350 times 10 per year, you can open up what’s called a Series LLC. Each property can be put into a separate Series. So the Master LLC will have nothing in it but each Series will have one property.

Each Series has a separate bank account. Don’t commingle funds between the different properties. For example, Series one might be called the street address such as 123 Main Street. You will open up a bank account under that Series and the title is going to be held under that Series’ name.

One of the reasons that Series are a good tool is because you will save money in the long run.  Specifically, you will only be paying the Secretary of State one renewal fee per year rather than multiple renewal fees for however many LLCs you have.   The caveat here is that if you want a series LLC, I highly recommend that you have a professional (attorney), set it up because you have to make sure that you abide by the Series statute in order for it to be recognized as a Series.

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