Series LLCs - Should they be used?

The concept behind the Series LLC is brilliant.  Allow for the creation of a single LLC and then allow for different "series" inside of the LLC to segregate the assets and the risk.  The net result is a simpler structure with greater protection.  

So should everyone be using series LLCs for everything?  The short answer is - Not yet!

There are a few issues with Series LLCs.

1. Only a few states actually have passed a Series LLC statute (Delaware, Nevada, Illinois, Iowa, Oklahoma, Tennessee, Texas and Utah).  It is not recommended to use an out of state Series LLC in a State without a statute, as there can be no guarantee that the "series" inside of the LLC will be respected.  In fact, my experience has been that the state in which the out-of-state Series LLC was used did NOT respect the various series as separate and simply considered the LLC as a single LLC.
2. Even in the states which do have Series LLC statues, there is very limited case law on the issue.  This means there is no guarantee that even in those state the courts will truly respect each series inside of the primary LLC as a separate entity for both liability and protection purposes. 
3. The American Bar Association has done their own analysis of the Series LLC and as of now they do not recommend using them for the same above reasons. 

Our recommendation is that generally we do not use Series LLCs, except in very limited circumstances.  This would be if you are only using the Series LLC in one of the above states, and your need for segregation of the liability and assets is fairly limited.  Otherwise, separate LLCs is still the way to go.

Remember, if you use an Asset Management Limited Partnership (AMLP) and then have separate single member LLCs underneath the AMLP, the underlying LLCs do not have any requirement for separate tax returns, thus minimizing expense while maintaining maximum protection.