Texas Single-Member LLC Charging Order Protection, The Honest Answer for 2026
A real estate investor in Austin emails us a version of this question every few weeks. "I formed a Texas single-member LLC for my rental house in 2024. My business attorney told me the charging order was the only thing a creditor could do. Then a CPA at a real estate meetup said Texas single-member LLCs are basically unprotected, like Florida. Who is right?"
The honest answer: nobody is fully right, because Texas has not produced an Olmstead-style appellate ruling, and the controlling statute can be read more than one way. This article walks through what Tex. Bus. Orgs. Code § 101.112 actually says, what Texas trial courts have done with single-member LLCs in practice, what attorneys structure around the uncertainty, and what to do with all of this if you own a Texas single-member LLC in 2026.
The 60-second answer
Tex. Bus. Orgs. Code § 101.112(d) declares the charging order to be the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the member's interest in a Texas LLC. The text is broad. It does not, on its face, distinguish single-member from multi-member LLCs. But Texas has not had a Florida-style appellate ruling testing the single-member edge case, and a creditor with a large judgment and a willing trial court may try to argue that the equitable concerns behind charging-order exclusivity (protecting the rights of other members) do not apply when there are no other members. The conservative practitioner posture is to add a second member with real economic substance, the same defensive structure used in Florida after Olmstead. The aggressive posture is to read § 101.112(d) as written and rely on its plain language. We walk through both below.
What the statute actually says
Tex. Bus. Orgs. Code § 101.112 governs the rights of a judgment creditor of a Texas LLC member. The key passages, as enacted:
Subsection (a) provides that on application by a judgment creditor, a court may charge the membership interest of the judgment debtor to satisfy the judgment.
Subsection (b) limits the creditor to the rights of an assignee of the membership interest. The creditor gets distributions if and when made; the creditor does not get management rights, voting rights, or the right to inspect records.
Subsection (d) is the load-bearing language: "The entry of a charging order is the exclusive remedy by which a judgment creditor of a member or of any other owner of a membership interest may satisfy a judgment out of the judgment debtor's membership interest." The statute does not say "of a multi-member LLC." It says "a member."
The full text is at the Texas statutes site, https://statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm. Read § 101.112 in full; it is two pages.
The Texas Business Organizations Code is among the most charging-order-protective LLC statutes in the country, on its face. The drafters included subsection (d) specifically to head off the Olmstead-style argument that the statute permitted other remedies because it did not explicitly foreclose them.
The Texas case-law gap
Here is what is true. Texas has not produced an appellate decision squarely deciding whether the charging-order-exclusivity language in § 101.112(d) applies to single-member LLCs. There are scattered trial-court rulings. There are bankruptcy-court rulings interpreting Texas law in the bankruptcy context. There are practitioner articles (Garrett Sutton of the Sutton Law Center has written about it; Jay Adkisson has Forbes columns on it). But there is no Texas Supreme Court ruling, and no Texas Court of Appeals ruling that has squarely held single-member LLC interests in Texas are or are not subject to remedies beyond the charging order.
The closest authority is bankruptcy. In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003), is the canonical bankruptcy case on single-member LLC vulnerability, and it has been cited by federal bankruptcy courts in Texas. Albright held that a single-member LLC interest can be turned over to the bankruptcy trustee because there are no other members whose rights need protection. Albright was a Colorado-law case, not a Texas-law case, but its reasoning has traveled.
What this means in practice: a Texas single-member LLC owner who files Chapter 7 bankruptcy is exposed under the Albright reasoning. A Texas single-member LLC owner who is sued in Texas state court has the plain text of § 101.112(d) on their side, with no Texas appellate ruling against them. The two outcomes can diverge.
Citation for Albright: In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003). Read it on Justia or directly in the Bankruptcy Reporter.
What attorneys actually structure
The Texas asset protection community is split, broadly, into two camps.
The plain-text camp reads § 101.112(d) as written. They form Texas single-member LLCs with confidence, document the operating agreement carefully, and rely on the statute. They argue that Texas has explicitly chosen to protect single-member LLCs in a way Florida has not, and that the absence of an Olmstead-style ruling reflects the strength of the statute, not a gap waiting to be exploited.
The conservative camp adds a second member as a structural defense. They reason that statutes can be reinterpreted, that the Albright bankruptcy line is real, and that a creditor with a $5 million judgment and a creative trial court can find ways to test the edges of the statute. They use the same multi-member structure that Florida attorneys use after Olmstead: a real second member with documented capital contribution, K-1 distributions, and operating-agreement rights.
Garrett Sutton, the Sutton Law Center attorney and author of Loopholes of Real Estate, has publicly favored the conservative camp for high-asset clients. His reasoning, paraphrased from his published material at https://corporatedirect.com: charging-order protection has historically been worth more than the cost of adding a second member, and the asymmetry favors caution. For a high-asset client, the cost of adding a second member is small. The cost of guessing wrong is large.
The aggressive camp is not wrong. The plain text of § 101.112(d) is genuinely strong. But the aggressive camp is making a bet on what Texas appellate courts will say if the question is ever squarely presented. The conservative camp removes that bet by making the question moot: the LLC is multi-member, so the Olmstead-style argument does not even reach the door.
The Texas Series LLC angle
Texas was an early adopter of the Series LLC structure under Tex. Bus. Orgs. Code § 101.601 et seq. A Series LLC is a single LLC at the state level with multiple internal series, each with its own assets, liabilities, and members. Each series is treated, under the statute, as a separate entity for liability purposes.
For single-member exposure, the Series LLC raises a question with no clean answer: if a Texas judgment creditor pursues an interest in a single-member Series, do they argue the Albright-style theory applies to that series specifically? The series is internally single-member. The umbrella LLC may have other series with other members. Texas case law has not resolved this. Practitioners structure around it the same way they structure around the single-member-LLC question generally: add a second member at the series level with real economic substance.
We have a separate guide on Texas Series LLCs for real estate investors; see /texas/blog/series-llc-real-estate-investors-2026/ for the structural mechanics.
The franchise tax angle (separate, but related)
Single-member Texas LLCs are disregarded for federal income tax (a sole proprietorship under Treasury Reg § 301.7701-3) but they are NOT disregarded for Texas franchise tax. The Texas franchise tax applies to LLCs based on revenue, regardless of federal classification. The 2026 no-tax-due threshold is $2.47 million in total revenue per Texas Comptroller updates. Single-member LLCs above that threshold owe franchise tax even though they pass through for federal purposes. We cover this in detail at /texas/blog/texas-llc-franchise-tax-guide/.
The reason this matters for asset protection: an LLC that fails to file its annual franchise tax report or its Public Information Report can be involuntarily terminated by the Texas Secretary of State. An involuntarily terminated LLC has no entity shield. Whatever charging-order protection § 101.112(d) provides goes away if the LLC has been administratively dissolved. Compliance is part of the asset protection structure, not separate from it.
What this means for a Texas LLC owner in 2026
If you own a Texas single-member LLC, here is the decision tree most attorneys we have read walk clients through:
If your assets at risk through the LLC are below roughly $250,000, the plain text of § 101.112(d) is reasonably defensible, and the cost of adding a second member may not be worth the friction. Document the operating agreement carefully, file your franchise tax report on time, and keep formalities tight.
If your assets at risk are above roughly $250,000, or if you operate in a high-litigation industry (real estate, construction, food service, professional services), the conservative posture starts to look better. Add a real second member, ideally a Wyoming holding LLC you own 100 percent of, and convert the Texas LLC to multi-member status with real economic substance.
If you have already been sued or have received a demand letter, talk to a Texas attorney before doing anything. Adding a second member after a creditor claim is the textbook fraudulent transfer fact pattern, and it can backfire. The Texas Uniform Fraudulent Transfer Act, codified at Tex. Bus. & Com. Code Chapter 24, gives creditors strong remedies against transfers made with intent to hinder, delay, or defraud.
Frequently Asked Questions
Is a Texas single-member LLC actually protected by the charging order rule?
The plain text of Tex. Bus. Orgs. Code § 101.112(d) says the charging order is the exclusive remedy for a creditor going after a member's interest, with no carve-out for single-member LLCs. The Texas legislature wrote that language broadly on purpose. But Texas has not produced an appellate ruling squarely testing whether the protection holds for single-member LLCs against an aggressive creditor argument, and the federal bankruptcy line (In re Albright) cuts the other way for bankruptcy proceedings. The conservative answer: yes for state court, less certain for federal bankruptcy. The aggressive answer: yes, by statute, period.
Should I add my spouse as a second member to my Texas LLC?
You can. The mechanics are the same as in any state: amend the operating agreement, document a real capital contribution, file an amendment if your formation requires one, and update your tax classification to partnership (Form 1065) if you want true multi-member status for federal purposes. The caveat: do this BEFORE any creditor claim is in the air. Adding a spouse the week after a lawsuit lands triggers Texas fraudulent transfer doctrine under Tex. Bus. & Com. Code Chapter 24, and the transfer can be unwound.
Does the Texas Series LLC give me single-member protection?
A Texas Series LLC is treated as a separate entity for liability purposes at the series level under Tex. Bus. Orgs. Code § 101.602. But the In re Albright-style argument that single-member LLCs are vulnerable in bankruptcy can be applied at the series level, not just the umbrella level. Practitioners who use Series LLCs for high-value real estate generally still add a real second member at each series, for the same reasons they add second members to standalone single-member LLCs.
What happens if my Texas LLC gets administratively dissolved by the Secretary of State?
Whatever charging-order protection § 101.112(d) provides goes away. An LLC that has been involuntarily terminated has no entity shield, no charging-order protection, and no separate legal personality. Creditors can reach the assets directly. The most common cause of administrative dissolution in Texas is failure to file the annual franchise tax report or the Public Information Report. Compliance is part of the asset protection structure.
Is forming a Wyoming LLC instead of a Texas LLC a better option for Texas residents?
It depends on the underlying business. If the business operates in Texas (Texas property, Texas customers, Texas employees), a Wyoming LLC will likely have to register as a foreign LLC in Texas under Tex. Bus. Orgs. Code § 9.001 et seq. and pay both Wyoming and Texas filing fees, plus Texas franchise tax on Texas-source revenue. The asset protection benefit of Wyoming may not be worth the doubled compliance cost. The structure that often makes more sense is a Wyoming holding LLC that owns the Texas operating LLC; the holding LLC sits in Wyoming and benefits from Wyo. Stat. § 17-29-503, while the Texas operating LLC handles the Texas business. We are not a law firm; this is general orientation.
What we can help with
We are a Texas registered agent and document preparation service designed for Texas LLC owners who want correct formation paperwork, on-time annual compliance, and an operating agreement template that includes the second-member admission, separateness, and capital account clauses needed to support a defensible asset protection structure. We are not a law firm and not your CPA. For the substantive design of an asset protection structure, work with a Texas attorney who has handled charging-order litigation.
Texas registered agent service is included with our LLC formation, with no extra charge for the first year. See our Texas pricing for details.
Independent Curator Disclosure: We are an independent Texas registered agent and document preparation service. The named experts in this article (Garrett Sutton of the Sutton Law Center and others) are referenced because their public commentary on Texas asset protection and charging-order doctrine is widely cited in the field. We are not affiliated with, sponsored by, or endorsed by any of these individuals or their firms. We have researched and synthesized publicly available content from these sources to inform the educational content above. Their inclusion does not constitute an endorsement, sponsorship, or affiliation. For advice specific to your situation, consult licensed counsel.
We are a document preparation and registered agent service. We are not a law firm, CPA, or financial advisor. The content above is general information, not legal, tax, or financial advice. Texas asset protection structures depend on facts specific to your situation. Talk to a Texas attorney before relying on any structure described here.