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Recognition means that you can operate
Recognition means that you can operate. Currently, only thirteen states allow for the formation of a Series LLC. However, just because a state does not provide for the creation of a Series LLC does not mean it will not recognize or allow a Series LLC to operate within it. Similar to the widespread use of Delaware corporations among Fortune 500 companies, a Texas Series LLC will be able to operate in all states across the country. Importantly, the Series LLC has existed in the country since 1996, when Delaware became the first state to pioneer this new business entity. Since its introduction over two decades ago, the Series LLC has been involved in thousands of lawsuits across the country. In that time period, the Series LLC structure has never been found invalid by a court. Not only has the legal structure never been successfully invalidated, but the attorneys who would stand to gain large payouts for their clients from invalidating the Series LLC have never even sought to challenge the entity form in court.
Additionally, not every state offers their own native Series LLC, but all states recognize the Series LLC structure from other states under the Full Faith and Credit clause of the US Constitution. You don’t need to do a foreign filing as long as you own the property with a Land Trust, which means the LLC isn’t doing business in that state. A court looks at the home state of the entity to apply that state’s law, which is why we use Texas - it has great charging order protection, no annual filing fees, and you get the same level of anonymity as a WY LLC by using an agent trust.