Series LLCs in Texas: Pros, Cons & Asset Shielding

The Texas Series LLC is one of the most powerful — yet misunderstood — tools for asset protection. Designed to isolate liability across multiple business activities or properties, the Series LLC allows you to operate distinct “series” under a single legal entity. At Guerra Days Law Group, we help investors and business owners structure Series LLCs properly to reduce risk, simplify management, and protect long-term wealth.

What Is a Series LLC?

A Series LLC is a legal entity formed under the Texas Business Organizations Code that allows for the creation of multiple “series” or “cells” within a single master LLC. Each series can hold its own assets, operate its own business activities, maintain separate records, and be insulated from the liabilities of the other series — all without filing multiple LLCs with the state.

Think of a Series LLC like an umbrella: the parent LLC oversees the structure, but each “spoke” or series underneath it operates as its own liability-protected division.

How a Series LLC Protects Your Assets

Each series within a properly maintained Series LLC is treated as a distinct legal compartment. This means:

• If one property in Series A faces a lawsuit or creditor claim, Series B and Series C assets are not liable
• Each series can enter contracts, hold title, and manage assets independently
• Your personal assets remain protected, just like with a standard LLC

It’s like having multiple LLCs — without the cost or red tape of maintaining dozens of separate entities.

Benefits of a Series LLC

• Asset Isolation: Each series limits liability to its own assets
• Efficiency: One state filing, one franchise tax report, one registered agent
• Cost Savings: Lower formation and maintenance costs versus multiple LLCs
• Ideal for Real Estate: Hold each property in a separate series to prevent cross-liability
• Privacy: Individual series names and operations are often off-record

Use Cases for Series LLCs

We commonly recommend Series LLCs to clients who:

• Own multiple rental properties or Airbnb units
• Buy, renovate, and flip multiple houses per year
• Have multiple streams of business income under one brand
• Need to isolate intellectual property from operating risk
• Plan to grow and add new ventures over time

By creating a separate series for each asset or venture, you build legal walls between them — so one failure doesn’t trigger a domino effect.

Important Legal Requirements

For a Series LLC to provide valid asset protection, you must:

• Include Series LLC language in the Certificate of Formation
• Maintain separate accounting records for each series
• Sign contracts clearly in the name of the specific series
• Use separate bank accounts (recommended) for each series
• Document internal governance in the Company Agreement

Failure to respect the legal separateness of each series could lead to a court piercing the series structure — exposing assets across all series.

Risks and Limitations of Series LLCs

While the Series LLC offers powerful protection when used correctly, it’s not for everyone. Be aware of these risks:

• Limited Recognition in Other States: Not all states recognize Series LLCs. If you do business outside Texas, check local law.
• Banking Confusion: Some banks are unfamiliar with Series LLCs, making account setup harder without legal support.
• Lender Hesitation: Certain lenders may avoid financing properties held in a series or may require transfers to single-member LLCs.
• IRS Uncertainty: While the IRS allows each series to elect its own tax treatment, there’s limited federal guidance on how Series LLCs are treated.

This makes it critical to work with attorneys who understand the nuances of Series LLC law and documentation.

Series LLC vs. Traditional LLCs

Here’s a quick comparison:

Our Series LLC Formation Services

At Guerra Days Law Group, we don’t just file paperwork — we build airtight protection. Our Series LLC services include:

1. Drafting the Certificate of Formation with Series language
2. Custom Company Agreements that address current and future series
3. Guidance on creating and naming each series correctly
4. Asset transfer deeds into each series (for real estate)
5. Banking and contract signing protocols
6. Ongoing legal support as you scale

Series LLCs + Trusts = Stronger Protection

Many of our clients place Series LLC membership interests inside a trust to further protect from probate, divorce, or personal creditor risks. This layered approach provides asset protection both inside and outside the LLC structure.

Explore More on Asset Protection

This page is part of our Texas Asset Protection Guide. You may also want to read:

• Asset Protection for Real Estate Investors
• Top Asset Protection Mistakes
• Business Entity Formation

Is a Series LLC Right for You?

Series LLCs are powerful, but they require careful setup. Let us review your portfolio or business model and advise whether a Series LLC is the best fit — or whether traditional LLCs, trusts, or other tools may be more effective.

Schedule a Strategy Call Today