What are some of the miscoceptions about the lack of history and novelty of the Series LLC?

In regards to Series LLCs and states that recognize them or not, the issue comes down to each specific state recognizing the "internal liability shield." Not if they have a Series LLC to create in that state or not--an investor in any state can form a Series LLC in a different state if he or she wants one. Every state has an internal liability shield for LLCs and that is what is analyzed in every state: the LLC Internal liability shield of the state you’re being sued in. There is a misconception that the Series LLC is a new entity. It is not. It was first created in 1996 in Delaware, over two decades ago. While the Traditional LLC is more established, it is not much “older.” The Traditional LLC first became available in Wyoming in 1977, but most other states did not follow suit until the 1990s. The next state was Delaware, which enacted LLC legislation in 1995, followed by California in 1994/5. It was not until 1996 that all states had an LLC option. The same year, the Series LLC was statutorily created. So it’s interesting how people quickly fall in love with the Traditional LLC thinking it’s been around forever. But the reality is that after the creation of the LLC in most states, the Series LLC immediately came into the game. Just one year after California codified the traditional LLC.

----------------------- Case Law: Those who believe the Series LLC is new often also erroneously believe there is a lack of case law to support the structure. But the fact that the Series LLC is an actual LLC means the same LLC case law will generally apply regarding liability shields and piercing the corporate veil. Nobody has ever even tried to challenge a Series LLC per say, and all the attacks people leverage against Series LLC’s are the same attacks one would use against multiple LLC’s. The Series LLC is just a continuation of existing LLC statute and law. When a state legislature enacts a Series LLC, they are not creating an entirely new statute, they are just adding another clause to their existing LLC statute. So for example, they would just be adding a section to the existing statute that permits serializing assets into individual compartments. The rest of the LLC statute stays the same. _

____________________ Extended legal explanation: What courts are going to look at if an LLC is sued in any state is the existing LLC member liability shields and the "independent liability shield" laws of that particular state. That will be a state-by-state evaluation. And then that state’s charging orders will come into play. So when I client comes in, it is not relevant what state they are residence of. You can live in any state and incorporate a business in any other state or country. But as of now, the general consensus is that the courts will use those state independent liability shields of where the lawsuit was brought. This opinion is supported by the American Bar Association Journal and in opinion letters from various state and federal courts and agencies. Since the existence of the LLC, much case law exists regarding piercing the corporate veil, and we still use traditional LLCs. The Series LLC is still an LLC. Therefore, the way to attack the Series LLC will be the same: to first pierce its veil. Once the veil is pierced, the issue is then, will the independent series hold up and stop the bleeding? That will be a case-by-case, state-by-state evaluation reflectings those states’ independent liability shields and charging orders. Every state has limited personal liability independent shields to one degree or another protecting its members, since every state has LLCs. Clients should be comfortable that the Series LLC is an LLC and there is lots of existing case law for LLCs and piercing the veil standards that first must be meet. The principle of separating out assets into compartmentalized series was established way before the birth of the Series LLC. The Tax Court has recognized that the several series of an investment fund may be considered distinct taxable entities. See National Securities Series- Industrial Stock Series v. Commissioner, 13 T.C. 884 (1949), acq., 1950-1 C.B. 4. So has the IRS. Remember that Series LLCs were originally created for mutual funds and series mutual funds by Section 18(f)(2) of the Investment Company Act and SEC Rule 18f-2 (17 CFR § 270.18 f-2). These were then created typically under Business Trusts or Corporations. PLR 200803004 (the separate portfolios of a series LLC will be individually classified as a partnership, disregarded entity, or association); PLR 200544018. (Separate portfolios of a series business trust are classified as business entities and not trusts; and each one with two or more members that does not elect association classification is a partnership); PLR 200303019; PLR 9847013 (if each series is treated as a separate trust and the creditors of one series of the trust may not reach the assets of any other series of the trust, each is a separate entity for tax purposes.) Rev. Rul. 55-39, 1955-1 C.B. 403, make it likely that the Service will take the same view in the case of an LLC series. Bishop and Kleinberger, Limited Liability Companies ¶ 2.11 (May 2006). The point of the above cases, and rules is to show that the IRS, SEC, Tax Courts, and similar authorities have been making rules and case law and guidelines for Series of assets and Series LLC. This is not new. The confusion lies in the fact that most people don't understand the legal system, and the testing of the Series protection structure has not been tested in all state courts. But then go back above to what we talked about regarding LLCs and independent liability shields.