We have formed many Texas series LLCs (and LLCs). Our firm’s founder was one of the first attorneys using the structure for protection of assets in Texas.
Texas was one of the first states to adopt legislation permitting the formation of series limited liability companies.
Essentially, a series LLC is a one or more subsidiary LLCs set up under one parent LLC. For example, Parent LLC has three series: A, B, and C. As long as each series “(1) has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations; or (2) has a separate business purposes or investment objective” only the liabilities of A can be enforced against the assets of A, only the liabilities of B can be enforced against the assets of B, and only the liabilities of C can be enforced against C.
The liabilities of one particular series can not be enforced against the assets of one of the other series or Parent, LLC.
One of the unanswered questions debated in the few states that allow series LLCs is whether courts will respect the inter-cell liability protection. I believe Texas courts will respect the inter-cell liability protection of a series LLC.
The most obvious benefit of a series LLC is that you only incur one filing fee for Parent, LLC regardless of the number of series Parent, LLC has. For example, the filing fee for Parent, LLC is $300.00 with the Texas Secretary of State’s office regardless of the number of series (i.e., other businesses) Parent, LLC has.
Here are some of our blog posts on series LLCs:
