Rental Property Investor · Toledo, OH · Member since 2023 · 39 posts · 14 votes
(Posted in wrong category please delete)
I have been doing a lot of research online while trying to figure out how I am going to restructure my rental business and one thing that has recently been introduced to me is the series LLC. I was going down the path of the hub and spoke model when I found a solution that would essentially solve the biggest issue I was facing. Having so many bank accounts and other administrative extra work.
I am in Ohio where Series LLCs are allowed and this sounds like a really good solution for me. However, the one bank account thing was what many have warned me about. I have read that this is a big no-no in trying to get asset protection. They basically have said this equals an easy piercing of the veil. I am just curious if someone could give a little insight on the series LLCs.
Do you use one?
Are there any major drawbacks compared to setting up multiple individual LLCs?
Do you know of any attorneys who could help me set one up properly?
Attorney · Member since 2022 · 160 posts · 186 votes
3y
Hi Corey,
I want to expand on something noted in a post above. Series LLCs are not really new in the United States when you look at them in comparison with traditional LLCs. Traditional LLCs in the United States were first established in 1977. In comparison, Series LLCs were first established in Delaware in 1996. Since the entity was created, it has been adopted by numerous States. Based on this, there has been a good amount of time to establish precedent on Series LLCs. Series LLCs are not an untested entities.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
I have a seperate LLC that pays all the bills and receives all the income from all my other LLC'S. My Attorney and CPA git together and set it up this way.
Another protection method I was reading about today is to have a friends LLC record an option against your properties. If you ever had a judgement against your properties the option would be sienor and could be exercised ahead of any judgement.
Attorney · Member since 2022 · 160 posts · 186 votes
3y
Hi Corey,
I want to expand on something noted in a post above. Series LLCs are not really new in the United States when you look at them in comparison with traditional LLCs. Traditional LLCs in the United States were first established in 1977. In comparison, Series LLCs were first established in Delaware in 1996. Since the entity was created, it has been adopted by numerous States. Based on this, there has been a good amount of time to establish precedent on Series LLCs. Series LLCs are not an untested entities.
You will never get two attorneys to agree on Series LLCs. Over the years, I hosted multiple panels on asset protection in general, including LLCs and Series LLCs. Invariably, one attorney opines that Series LLCs are the best invention since sliced bread and solve all problems, the next attorney retorts that Series LLCs do not work at all for such and such reasons, and the third one contradicts both of them. Just the nature of the field, I'm not trying to be funny.
That said, the attorneys who fall back on "it's too new" are not to be trusted, in my opinion. It simply means they were too lazy to research the topic. As @Jason Marino pointed out, Series LLCs have been around long enough. You may be for them or against them, but you can no longer hide behind the "too new" argument.
Finally, opinions of non-attorneys (myself included) on viability of Series LLCs are worthless.