Series LLCs in Illinois

Randall H. Borkus (principal of Borkuslaw, Ltd, and VP of Legal Research at InKnowVision, LLC) and Kimberly J. Myers (Borkuslaw, Ltd) have recently published their article entitled Series LLCs: Practical Pointers and Tax Implications, 95 Ill. B.J. 22 (2007).

The authors discuss the 2005 amendments to the Illinois Limited Liability Company Act to allow the designation of a series of ownership interests.  They explain that:

The uniqueness of the “series” structure is that the members of an ISLLC can hold separate property interests in separate series that are compartmentalized for liability purposes. The profits and losses as well as the assets and liabilities of each series are legally separated from each other.

The significant advantage of this structure is the ability of a business owner to hold all of his, her, or its investment properties or lines of business in one master LLC (with an unlimited number of other members), without the attendant cost of forming and maintaining multiple legal entities. An ISLLC is similar in structure to a parent company with multiple tiers of subsidiaries, insofar as the risks and liabilities associated with each series are insulated from the risks and liabilities of every other series.

However, unlike the “affiliated company” structure, an ISLLC may significantly reduce legal, accounting, and other administrative and compliance expenses (including taxes). Therefore, the ISLLC has the effect of accommodating multiple subsidiaries without the associated organization, maintenance, and compliance expenses.