A fundamental asset protection strategy is to keep your assets that might generate liability separate from each other. The challenge with that is the expense and hassle of setting up separate ownership entities. For example, if you decide that the best ownership entity for your situation is an LLC and you have 20 income-producing properties, you could conceivably need 20 LLCs.

Some states have passed legislation creating a Series LLC which allows multiple units to be created under one LLC umbrella. Each of those units is separate, with its own assets, purpose, managers and members.

This sounds like a great idea for real estate investors but there are a couple of issues that require caution. First, the Series LLC is new and there is no case law to back up the statutes. We know what the legislation says, but we don’t know how the courts will interpret it. Second, the Series LLC has been adopted by only a few states so far, and we don’t know if a non-Series LLC state would honor this entity in the case of a dispute with parties in multiple states. As more states pass Series LLC legislation, that will become less of an issue.

Your best strategy right now is to talk to your attorney to find out if a Series LLC should be part of your asset protection plan. Or contact Anderson Business Advisors, PLLC.

Chief Blogger
Wealth Intelligence Academy