As part of our series of articles explaining the Series LLC in greater detail, we will now take a closer look at eligibility requirements for forming this entity and which rules and regulations apply to it. Let's learn more about the finer points of series LLC rules, eligibility, how they are formed, and what regulations apply to this entity.
Almost any investor is eligible to form a Series LLC. Laws governing the Series LLC are dictated at the state level, just like the laws for other types of limited liability companies. The major eligibility criterion that is consistent across all of them is that one must be 18 years of age or older to create the entity.
Even the documents required to form a Series LLC are fairly consistent from state to state. To create a Series LLC, you will need the following:
The Series LLC is an incredibly versatile tool. There are no rules about what type of business you must run to take advantage of the entity. Each Series can hold any type of asset you choose. While most investors use the Series LLC as an asset-holding company for real estate, other types of assets may be safeguarded within the entity as well. Similarly, there are no eligibility restrictions based on geography. Even if you live and invest in a state which does not offer its own Series LLC, you can always form an out-of-state Series LLC in the jurisdiction of your choosing. Investors can strategically pick which state to form their Series LLC in based on the requirements and regulations of that state.
Internally, Series LLCs are governed by their Operating Agreements, just like Traditional LLCs. The Operating Agreement spells out important details like how profits and losses are divided, how business decisions are made for the entity, and what procedures must be followed for selling the assets within the entity.
Series LLCs must also comply with state and federal laws. The most important regulations to be aware of are the following:
With the legal professionals at Royal Legal Solutions by your side, you can set up a no-hassle entity that will offer you the strongest protection possible. Our experts can not only help you form your Series LLC, but also understand how to use it to effectively manage your real estate business while also protecting your real estate assets. We are here to help you understand the entity so that you can get the most out of it. If you would like to learn more, check out some of the other articles here on the Royal Legal Solutions website, including the first article in this series, “Series LLC: The How, The Why, and The Basics.” You can also contact us directly to ask any additional questions you may have or schedule your personalized consultation today.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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