Advice needed on is this actually useful or just marketing?

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Illustrative scenario prepared by my practice.
For informational purposes only. Not legal advice.
Hypothetical question

I do rental real estate - have 4 properties now, plan to get more. My accountant mentioned Series LLCs where each property is a separate "series" under one parent LLC. Supposedly gives liability protection without filing separate LLCs for each.

Sounds too good to be true? Anyone actually using one of these?

Illustrative response

i use one in texas for 7 properties. works fine so far. each series has its own bank account and keeps books separately. saves me like $2K/year in filing fees vs having 7 separate LLCs

Illustrative response

Series LLCs are real and work in certain states - Texas, Delaware, Nevada, Illinois among others. The idea is sound: internal liability shields between series.

BUT (and this is a big but): not every state recognizes them. If you have a property in a state that doesn't have Series LLC laws, courts there might not respect your liability shields. It's untested in litigation in most jurisdictions.

Illustrative response

real talk - most landlords don't need this level of complexity. just get good umbrella insurance. costs like $300/year and covers way more scenarios than an LLC ever would

Illustrative response

another problem: banks HATE series LLCs. try getting a mortgage in a series name. most lenders won't touch it, they want the property in a standalone LLC they can underwrite normally

Illustrative response

All my properties are in Texas and I buy cash then refi, so the bank stuff might not matter as much. But the "not tested in court" part worries me.

Illustrative response

If everything's in Texas and stays in Texas, you're probably fine. Texas courts will respect Texas Series LLC statutes. The risk is if you ever expand to other states or get sued in federal court where the judge might apply different state law.

For 4 properties all in one state, honestly either approach works. Series LLC saves money, separate LLCs give you more certainty. Both beat owning properties in your personal name.

Illustrative response

from the tax side: IRS hasn't given clear guidance on series LLCs. most CPAs treat each series as a disregarded entity but it's a gray area. just make sure you keep VERY clean books between series or you'll give a plaintiff's attorney ammo to pierce the veil