Series LLC Formation Lawyer in Washington DC/MD/VA

18 Replies

I listened to the podcast on asset protection, and honestly dismissed it for a couple of weeks. However, the more I am learning about RE, the more I realized that I need to have an asset protection, estate planning and all that stuff in place. My first step is get a series LLC formed in Delaware. Do you know any lawyers who can help in getting this is done right? I live in Washington DC, so someone who knows a ton about DC would be great.

Many thanks!!! I am new to the site, but will post a picture to introduce myself.

Originally posted by @Brad Chandler :

We had a delaware series LLC years ago. Not sure I would do it again. I think it is overkill. What type of investing do you do Peter?

I was looking to use the Illinois version of the series LLC. What was it about it that you didn't like?

I've been creating Series LLCs for clients for over 10 years in Utah. We love them. Fantastic vehicles for holding numerous rental properties. MD/VA do not authorize Series. DC does. Typically I do not set them up for flips/wholesales (we use a tax savings entity for those pursuits). So this is typically an asset protection vehicle to separate out liability one property from the other.

There is debate if you create an foreign series LLC (foreign here means out of your home state) to use in your state and whether the individual series would be considered separate. I'm of the opinion they would not.

For my Utah clients with property in other states, we title them in a trust and make the beneficiary of that trust a series. That way we generally do not need to registered the LLC in that state (saving $) and with the ability to argue that the trust might be in a non-recognizing state, but the beneficiary is and the home state laws would apply.

There are some bookkeeping and logistical hoops to jump through that are different than a standard LLC. You can learn those. But the series is worth it.

Jeff

On the comment of using multiple standard LLCs. REMEMBER you want more than one owner of you LLC for asset protection purposes (long explanation). And if you have more than one member of the LLC, you have to file a tax return and issue K1s. This gets costly!!

If your state does not recognize series, the create a multi-member LLC as a holding company (for asset protection and 1 tax return), then create wholly-owned subsidiary LLCs (child companies) of the holding co. These child co's will separate out the liability (like series do) but won't have to file a separate tax return. This structure basically is mirrored in the series LLC.

This is the "old fashioned" way here in Utah as we've mostly moved to the series LLC :)

Jeff

Originally posted by @Brad Chandler :

@Jim Groves - it just really isn't needed. You can use regular LLC's and get the same protection.

Agreed, but the difference is that an add-on to the series costs $75 but a new LLC costs $500. It seems to be very well suited for multiple real estate investments

Many thanks for the advice gentlemen. I truly appreciate your it!!  

Jeffrey Breglio just a couple more questions:

1) Do you file one tax return to the federal government as well, or do you file separately for each individual series

2) I called my registered agent in Delaware, and I can easily change my LLC into a Series LLC through an amendment of the company formation documents. However, they also said forming the individual series is an internal procedure.....something which can be done with a company resolution - that sounds suspicious to me. Is it the same in Utah?

The overall series LLC will file for whatever tax classification it is registered under. Each series does NOT file a return. They act like "wholly owned subsidiaries" who's accounting passes through to the main LLC. But you must keep membership the same throughout!

You can make each series with different owners and structures, but then you have to create a new operating agreement for it, it's own EIN and tax return, etc, and then you've just eliminated the convenience of a series LLC that you wanted in the first place. So I never recommend this.

Yes, creating a series is an internal document. We provide a company resolution specifically for this in our Series LLC package. Then clients can simply create as needed.

Jeff

@Peter Forrest Do you have your properties financed with traditional 30 year Fannie/Freddie loan products? If you do, you will not be able to move the properties into an LLC without refinancing into a commercial loan, which will likely have a shorter amortization and higher interest rate.

Im also curious.....why do so many people go the LLC route? I find that an umbrella policy will help protect your assets pretty well. My liability is up to $2 million. If you are truly doing something negligent that you would get sued for, it is unlikely that your LLC will provide the protection that you think it will.

Originally posted by @Russell Brazil :

@Peter Forrest Do you have your properties financed with traditional 30 year Fannie/Freddie loan products? If you do, you will not be able to move the properties into an LLC without refinancing into a commercial loan, which will likely have a shorter amortization and higher interest rate.

Im also curious.....why do so many people go the LLC route? I find that an umbrella policy will help protect your assets pretty well. My liability is up to $2 million. If you are truly doing something negligent that you would get sued for, it is unlikely that your LLC will provide the protection that you think it will.

I am reading this thread and that is exacly what I am thinking too, did you receive any answer to this question yet?

As for asset protection, I like to use recorded Deeds of Trust held by trusts or LLCs to  not have any equity exposed . When attorneys see there is no equity in the property they tend to go away.

I'm an investor living and working in DC. I have an LLC formed in DC through which I do my hard money lending. Contrary to what I thought would be the case, I formed my LLC completely online. I only had to answer about 7-8 questions and pay the fee. It was incredibly easy to do.

I am own and self-manage several residential properties. Like Russell Brazil, I also have a $2M commercial comprehensive liability insurance policy which covers those properties. The premium is quite cheap and it gives me plenty of piece of mind. 

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