Nevada Series LLC

The State of Nevada has joined a growing number of states which permits the formation of a Series LLC. A Series LLC is authorized by NRS 86.296. The use of a Series LLC can be of great financial benefit to those of us who have multiple assets, particularly multiple pieces of real estate.

Protecting Assets With A Nevada LLC

The LLC in Nevada provides some of the strongest asset protection in the United States. Like most states, Nevada limits the creditor of a member (owner) to a charging order against the profits of the LLC. Pursuant to the terms of the charging order, the judgment creditor is permitted to attach only the profits of the LLC which will be distributed to the judgment debtor. The charging order prohibits the judgment creditor from taking any other action against the LLC or its assets. Once the judgment creditor has received full satisfaction of the judgment through the charging order, his/her remedies against the LLC terminate.

However, Nevada has declared that the charging order is the exclusive remedy available to a judgment creditor against a member’s interest. The exclusive remedy phrase has been used by only 4 states in the United States: Alaska, Arizona, Oklahoma and Nevada. All other states list the charging order as the remedy available to the judgment creditor. Some states, such as California, permit the judgment creditor to take additional actions against the LLC in the event the judgment creditor fails to receive any payments through the charging order.

What Makes A Series LLC Different?

Additionally, Nevada has declared that a Series LLC is a legal entity in the State of Nevada. The Series LLC differs from a regular LLC in that it provides additional asset protection for the assets of an LLC. Normally, all assets owned by an LLC are at risk in the event of a judgment against the LLC. That is not so in the case of a Series LLC. The best way to explain the Series LLC is to visualize a jellyfish swimming in the ocean with six tentacles hanging from its body. The body of the jellyfish is the main LLC. Each tentacle is a separate series of the LLC. Each tentacle may own assets. In the event one of the series of the LLC is sued and a judgment obtained, the judgment creditor may attach the assets of that series only. The assets held by the remaining series of the LLC may not be attached by that judgment creditor.

Additionally, the members of each series may be different members. A person can be the member of series “A” but not of the remaining series. And, the manager of the LLC may, but does not have to be, the manager of each series of the LLC. Each series can have a different manager.

Protection For Real Estate Investors

This permits a person who has multiple pieces of real estate to protect each property individually, but still have to pay only one state fee for the LLC. The LLC is the entity which must pay its filing fee. The individual series do not pay any additional fees. Consequently, the Nevada Series LLC is an entity which will protect a maximum number of assets for the lowest price possible.