Skip to content
Call Now To Schedule An Asset Protection Analysis: (800) 231-7112

What is an LLLP?

Everything evolves, even legal concepts and tools. And the Limited Liability Limited Partnership (LLLP) is an example of one such evolution. So what is this new animal? Well if you already understand what a Limited Partnership (LP) and a Limited Liability Company (LLC) are, then understanding the LLLP is a piece of cake.

Like the fabled Jackelope, it is a hybrid of the two. In the LP, the General Partner has unlimited liability for the actions of the partnership, while the Limited Partners have limited liability. To get around that many planners use an LLC to serve as the GP, thus eliminating that risk and creating limited liability for all the partners.

With the new LLLP, the GP already has limited liability, eliminating the need for an additional LLC. Basically you can think of an LLLP as a traditional LP, with the benefits of an LLC as General Partner built in. That’s basically it, nothing more fancy than that.

Creation of an LLLP

In total 22 States currently allow, in some manner, for the creation of an LLLP. Several of these states don’t actually have an LLLP statute at all and creation requires the draftor to reference both the LP and the LLC statutes. In other states there is actually a Statute specifically addressing the creation of the LLLP.

LLLP and Asset Protection

So what does all this mean for Asset Protection? Is it time for everyone who has an LP to run to the new LLLP? Not really. If your plan was set up with an LP and you judiciously avoided exposing the Partnership (and hence the GP’s) to any risky assets or businesses, then converting to an LLLP is unnecessary since limiting the risk of the GP has already been accomplished. If you have an LP, and already use an LLC as the GP, then it is also unnecessary, since again the goal of limiting the liability of the GP has already been achieved.

If you are starting from scratch, and can utilize one of the states which allow for it, then using an LLLP may be the right choice for you. Nevertheless, there may still be reasons to use an LLC as the General Partner if there is any risk of infection from within. This is especially true if you want to manage more than one LP or desire additional flexibility about the transfer of management without a need to fiddle with the underlying LP. his more traditional structure also allows you to set up a completely different set of management rules and separate operating agreement without complex drafting inside the LLLP. This may be particularly important if your limited partners are different from the general partners.

The key with any planning is not to let the tail wag the dog. The right choice should be based on your particular “real world” situation and not on a theoretical “text book” analysis. I often get “which one is better” calls which remind me of grade school arguments about who would win Superman or Spiderman.

Using an LLLP may be appropriate for your situation or it may not, but figuring out when is a job best done with the help of qualified counsel. If you are researching asset protection the best possible advise I can give you is to pick up the phone and talk to someone who is experienced in this area of law. Research is great, but there is simply no substitute for people. That is why we are here isn’t it?

One of The Nation's Leading Asset Protection Attorneys

This Post Has 2 Comments

  1. If one of the partners in an LLLP is an LLC, does this create a maze of tax filings? For instance, The LLLP issues a K-1 to each general partner (say one is a human and one is an LLC).
    Does the LLC now have to file a 1065? Or since an LLC is a pass through entity as well, does it simply let the LLC member report on Schedule C as normal? Is the answer different if it’s an LLP (not an LLLP) and one partner is an LLC?

Leave a Reply

Your email address will not be published. Required fields are marked *

Pashmina Lalchandani

CEO & Co-Founder, Bar & Cocoa / Owner, Flow Simple
December 9, 2010, Douglass was a client of Pashmina’s

I’ve known Doug in many contexts, as a friend, as a client and as a business partner and he impresses me on all levels. He’s dependable, smart, generous and I wouldn’t hesitate recommending him and his law firm to anyone.
He’s the best and most ethical lawyers providing asset protection with rock solid strategies to give you peace of mind about your wealth. Straight forward, and straight talk. Doug is exactly the lawyer I want on my side. If I send someone to Doug, I know they’ll thank me for it!

Social & Solar Entrepreneur, Pan Afrikan Theorist, Translator/Interpreter,
Founder & Visionary Leader @ Afrikanpride.
March 12, 2011, Marlon E. D. J. worked with Douglass but at different companies

Doug is one of the most powerful thinker i have came across. During the short time that i have known Doug he has been a great source of inspiration. He has a simplistic yet effective and accurate way to analyze anything you bring to his attention, and then by asking you key questions he gets you to see the light at the end of the tunnel. Besides being extremely bright, he is a genuine and caring individual which is why I feel fortunate to know him. I can say without a doubt that he his the person you would want to talk to if you were in need of a person with his expertise.
Most of the lawyers out there will probably meet your needs, but if you are looking for someone to exceed your expectations and give you that wow factor, look no more he is the person for the job.

Patricia Salter

Associate Dentist at Smileology
December 1, 2010, Patricia was a client of Douglass’

I have been a client of Douglas Lodmell’s since 2001. My main concern was asset protection in this litigious society. I can sleep alot better at night knowing I have the instruments in place to protect the fruits of my labor, and that they will not end up in the hands of a slick trial attorney.

Corporate Transparency Act

Stay compliant with the Corporate Transparency Act.
Report your business entities easily through FinCEN’s streamlined process.

Contact Us Today to Schedule an Asset Protection Analysis.

800-231-7112

Back To Top