How to Convert LLC to Series LLC

By Jeffry Olson, J.D.

How to Convert LLC to Series LLC

By Jeffry Olson, J.D.

Approximately 17 states in the U.S. allow for the creation of a series Limited Liability Company. If you previously formed your company as a traditional LLC, it is possible to legally convert your LLC to a series LLC.

Folder tab reading "series LLC"

What is a series LLC?

In general, LLCs are formed to provide liability protection for the owners, known as members. The liability of members is limited to the assets of the LLC. For example, a creditor for a liability incurred by the LLC is limited to collecting that liability from the assets of the LLC. The personal assets of its members are protected.

However, all assets within the LLC are subject to liability. Historically, to avoid this problem, individuals formed separate LLCs. A series LLC allows members to separate assets within the same LLC. Only assets in the same series are subject to creditors.

For example, an LLC may be formed to own and manage multiple real estate assets. Under a traditional LLC, creditors of one real estate asset are able to attach liability to all real estate assets owned by the LLC. In a series LLC, each real estate asset could be characterized as its own series. This prevents the creditor for one property from attaching liability to other properties held by the series LLC.

Can an existing LLC be converted to a series LLC?

Yes, an existing LLC can be converted to a series LLC. The process varies by state, depending on whether the jurisdiction recognizes series LLCs.

States That Recognize Series LLCs

Converting an LLC to a series LLC is simplest in states that recognize series LLCs. Generally, the LLC must file an amendment to the articles of organization with the Secretary of State. That amendment states that the LLC is now a series LLC and should be treated as such. Other things may also need to be changed, depending on the jurisdiction.

Further, a new series LLC operating agreement must be drafted. Again, the requirements vary depending on the jurisdiction. This new operating agreement provides how the LLC will now be managed as a series LLC. It is not enough to merely file the amendment to the articles of organization with the Secretary of State.

The property held by the series LLC should be titled appropriately. This makes it more difficult for a creditor to deny the existence of the series LLC.

Making a mistake with any of these documents may result in a court treating the organization as a standard LLC, not a series LLC.

States That Do Not Recognize Series LLCs

If your jurisdiction does not recognize series LLCs, the process is more complicated. First, you must domesticate your LLC in a jurisdiction that recognizes series LLCs. Then, you must convert your LLC to a series LLC. This process can typically be done simultaneously.

Be advised, if you still wish to operate your LLC in the original jurisdiction, you will need to register your LLC in the original jurisdiction, now as a foreign LLC.

Any mistake in this process may result in unintended consequences, such as a court treating your LLC as a standard LLC, not a series LLC. More steps means more complications and more opportunities for a mistake to occur.

Converting a Standard LLC to a Series LLC

If you wish to convert your LLC to a series LLC, a number of legal steps must be taken. While still possible, the process is more complicated if your state does not recognize series LLCs.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.