The answer to the question is YES. This can be accomplished by utilizing a series LLC structure.
A series LLC is essentially a traditional LLC with the added ability to create cells or subsidiary LLCs within the framework of one LLC. This structure is often used to protect against personal liability and to insulate one business from the debts and obligations of another.
Before states began to authorize the use of series LLCs, business owners and investors needed one business entity for each company or property they owned if they wanted to insulate each from the liabilities of the others.
Now, a business owner or investor can insulate him or herself from personal liability and insulate multiple businesses or properties from each other by utilizing a single series LLC.
Imagine owning a condo and a duplex. If you personally own these two properties, you will be personally liable for any obligations and liabilities related to these properties. And all of your non-exempt assets, including the condo, duplex, and your personal assets will be at risk.
If a traditional LLC is used to buy the condo and the duplex, you will be insulated from personal liability. But, both the condo and the duplex will still be exposed to the liabilities of the other.
In this case, you can create a parent LLC by filing a certificate of formation with special language authorizing the creation of one or more subsidiary LLCs. Then, you can go on to create two subsidiary LLCs that are owned by the parent LLC––one to purchase the condo and one to purchase the duplex.
Afterward, if someone sues you as a result of being injured in the duplex, only the LLC that owns the duplex will be liable and at risk. The parent LLC and the LLC that owns the condo, as well as, your personal assets will be insulated from the liabilities associated with the duplex.
This level of protection can only be achieved by utilizing a series LLC or by forming multiple LLCs. But, due to the cost and inefficiencies involved in setting up a separate LLC for each property you own, a series LLC would be a better solution.
There are two primary advantages to using a series LLC - limited liability and tax simplicity:
As you can see, a series LLC is tailor-made for certain types of business owners, especially real estate investors and those who own and operate multiple properties. If you are interested in the benefits provided by a series LLC structure, feel free to contact us today to arrange a consultation with an experienced business law attorney who can provide you with more details.