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The limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership, a form of business entity recognized under U.S. commercial law. An LLLP is a limited partnership and as such consists of one or more general partners and one or more limited partners. The general partners manage the LLLP, while typically the limited partners only have a financial interest.
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The difference between an LLLP and a traditional LP is with respect to the general partner's liability for the debts and obligations of the limited partnership. In a traditional limited partnership the general partners are jointly and severally liable for the debts and obligations of the limited partnership; limited partners are not liable for those debts and obligations beyond the amount of their respective capital contributions.
In an LLLP, by having the limited partnership make an election under state law, the general partners are afforded limited liability for the debts and obligations of the limited partnership that arise during the period that the LLLP election is in place. Certain LLLP elections take the form of the limited partnership electing to be a limited liability partnership (this is the format used in, for example, Delaware) while in other states the election is made in the certificate of limited partnership (examples being Florida, Hawaii and Kentucky). Most states require that an LLLP identify itself in its name, but those requirements are not universal.
Because the LLLP is so new, its use is not widespread. Arkansas, Arizona, Colorado, Delaware, Florida, Georgia, Maryland, Nevada, Texas and Kentucky all have adopted statutes that allow for the formation of LLLPs, usually as a conversion of an existing LP (the general partners might want to do this to reduce their legal liability).
The filing fees of an LLLP vs. a limited partnership are at times higher. In the case of Nevada, the Secretary of State charges $75 to register a limited partnership and $100 to register an LLLP. Additionally, the initial and annual report filing for an LLLP in Nevada is $175 vs. $125 for a limited partnership. Conversely, in Kentucky the filing fee for a limited partnership is no higher if the partnership elects to be an LLLP.
LLLPs are most common in the real estate business, although other businesses can use the form as well, for example, CNN. There exist significant questions regarding whether the limited liability provided general partners by the LLLP election will be effective in states that do not have an LLLP statute.
Though California does not have a state statute allowing formation of an LLLP, it does recognize LLLPs formed under the laws of another state. Registering an LLLP formed in another state in California will require the annual franchise tax of $800, the same as other entities formed in California.
Illinois, though not having an enabling statute, does allow formation of an LLLP under RULPA (Revised Uniform Limited Partnership Act).