Based upon Delaware 's statutes, the primary benefits which can be attained through using the Series LLCs are as follows:

1. The business owner has the ability to hold all of his investment properties or lines of business in one LLC without the costs associated with forming and maintaining multiple LLCs or subsidiaries. It is analogous to a parent company with multiple tiers of subsidiaries; the liabilities, with respect to each series of property interests, are insulated from the risks and liabilities of every other series of property interests;

2. A series LLC may actually provide asset protection benefits that are superior to multiple LLC's because liabilities can be segregated within a series;

3. A new series within the umbrella LLC can be added easily by a simple amendment to the LLC agreement without additional filings with the secretary of state;

4. A series within the umbrella LLC may be dissolved easily without affecting the other series or the umbrella LLC. Pursuant to 6 Del. Code § 18-801(a), a series in an LLC is dissolved (a) on a specified date within the LLC agreement, (b) the happening of a certain event specified in the LLC agreement, (c) the affirmative vote or written consent of the LLC members associated with the series who own 2/3 interest, or (d) by judicial decree. However, 6 Del Code §18-215 (j) provides that the dissolution of a series will not require the dissolution of the entire LLC;

5. A series LLC has the ability to reduce legal, accounting and administrative fees in certain circumstances where multiple LLCs would have otherwise been formed to curtail the liability exposure. This is especially true in states such as California where a minimum Franchise Tax of $800 is imposed annually on each entity formed in that state;

6. A series LLC allows tax-free transfers within the LLC.

In order to achieve the compartmentalization of different series in Delaware, the following requirements, which are set forth in Section 18-215(b) of the Delaware Act must be met:

1. Notice of the limitation on liabilities of each series must be set forth in the certificate of formation of the LLC, which is on file in the office of the Secretary of State of Delaware. The Certificate of Formation must state that the liability of the LLC is limited by series. This statement is deemed to provide notice to the public of the limitation on liability. At this time, the LLC need not make any other formal disclosure to third parties that the obligations cannot be enforced against the assets of the LLC as a whole. However, it would be good business practice to make the limitation on liability clear to the creditor to ensure that the separate series are respected.

2. The LLC agreement creates one or more series;

3. Separate and distinct records are maintained for each series;

4. The assets associated with each series are held and accounted for separately from the other assets of the LLC or any other series;

5. The LLC agreement provides that liabilities will be isolated between series. The LLC agreement must provide for the compartmentalization of liabilities between the series, and assets must be held and accounted for separately. If this is not done, there is the potential that the limited liability between series would be lost. The statute is not clear to what extent that the assets must be held and accounted for separately. It is also not clear whether the assets must be held in the individual name of the series or whether it is sufficient to segregate the assets among series on the books and records of the LLC.

Although there are substantial potential benefits from a series LLC, these entities are relatively new and to date there is no case law or IRS revenue rulings interpreting the Delaware series statute. Issues remain regarding their effectiveness and implementation. Some of the unanswered questions include:

• Is a series LLC a single entity or two or more entities?

• Will a series LLC be respected in other states? A primary benefit of passing series LLC legislation in Nevada would be the use of such an entity in Nevada as well as other states, through a foreign filing, such as California where the cost of forming several LLCs is high. The series LLC should be respected in a state such as California because the California Corporations Code § 17450 provides:

The laws of the state or foreign country under which a foreign limited liability company is organized shall govern its organization and internal affairs and the liability and authority of its managers and members.

A foreign limited liability company may not be denied registration by reason of any difference between those laws and the laws of this state.

• Will separate series be respected by other states for liability purposes? For instance could a creditor argue that it had insufficient notice of the segregation of the series? At this time there is no case law interpreting the Delaware Series LLC statute but pursuant to §18-215(b) of Title 6 of the Delaware code, notice is provided as long as the proper filings are made. Section 18-215(b) of the Delaware statute provides: "if notice of the limitation on liabilities of a series . . .is set forth in the certificate of formation of the limited liability company, then the debts, liabilities, obligations and expenses incurred . . shall be enforceable against the assets of such series only." Notwithstanding this provision, it would be good business practice to provide all creditors actual notice of the existence of the separate series thereby eliminating any notice argument a creditor may have.

Although certain questions remain unanswered at this time regarding the administration and implementation of the series LLC, it should be remembered that it was not that long ago that the viability and protection provided by traditional LLCs was also looked upon with skepticism.