Limited Liability Limited Partnership (LLLP) Agreement
Updated May 2026. The LLLP is the limited partnership that fixed its biggest weakness: unlimited liability for the general partner. The LP/GP structure remains, but the GP’s personal assets are protected. This page covers when an LLLP is the right answer, which states recognise it, and the drafting details. General legal information, not legal advice.
General information, not legal advice. LLLP state law varies meaningfully. The state filing matters more than the agreement here; confirm LLLP status before relying on it.
The LP Liability Problem the LLLP Solves
A traditional limited partnership has two classes of partners. Limited partners (LPs) are passive investors with liability capped at their capital contribution. General partners (GPs) manage the partnership and have unlimited personal liability for all partnership obligations. This was the original eighteenth-century design: limited partners get protection at the cost of being silent; general partners get control at the cost of personal exposure.
In modern practice, the unlimited GP liability is unacceptable. The standard workaround for decades was to interpose a corporate or LLC general partner: the human GP forms a corporation (or LLC), and the corporation serves as the LP’s general partner. The corporate veil shields the human GP. This works, but it adds an entity, additional filings, and ongoing administrative overhead.
The LLLP eliminates the workaround. In LLLP-permitting states, the partnership can elect LLLP status on its certificate of limited partnership, and the general partner enjoys the same statutory liability shield as the limited partners. The GP can now be a human being (or a non-shield entity) without exposing personal assets to partnership liabilities.
State Recognition: Where the LLLP Works
The LLLP form was introduced by the 2001 Uniform Limited Partnership Act (ULPA 2001). Approximately 25 states have adopted ULPA 2001 or otherwise enacted LLLP-permitting legislation. State law varies meaningfully; partners should confirm current state law before forming.
| State | Status | Statute |
|---|---|---|
| Delaware | LLLP permitted | 6 Del. C. §17-214 |
| Florida | LLLP permitted | F.S. §620.1102 |
| Texas | LLLP permitted | Tex. BOC §153.351 |
| Georgia | LLLP permitted | O.C.G.A. §14-9A-1100 |
| Colorado | LLLP permitted | C.R.S. §7-64-101 |
| Arizona | LLLP permitted | A.R.S. §29-367 |
| Hawaii | LLLP permitted | HRS §425E-1101 |
| Wyoming | LLLP permitted | Wyo. Stat. §17-14-203 |
| California | LLLP NOT permitted | California has not adopted LLLP-enabling legislation; CA LPs are pre-ULPA-2001 form |
| New York | LLLP NOT permitted | NY has not adopted LLLP form; NY LPs operate under NY Partnership Law Art. 8 |
| New Jersey | LLLP NOT permitted | NJ has not adopted LLLP form |
List is illustrative; verify current state law via the secretary of state and consult counsel before forming. A partnership that forms in an LLLP-permitting state but does business in a non-LLLP state generally retains its LLLP status under the internal-affairs doctrine, but some states have specifically declined to recognise foreign LLLPs in particular contexts; check the foreign-LLLP recognition rule of any state where the partnership will be registered.
When to Use an LLLP Instead of an LLC
The principal reason to choose an LLLP over an LLC is preservation of the two-tier LP/GP structure for valuation-discount purposes. Family limited partnerships (FLPs) used for estate planning rely on the well-established LP/GP case law to support valuation discounts on the LP interests. The same structure in an LLC form (member-manager with active members and economic-only members) is less well-supported by case law. Many estate planners still prefer the LP form (now LLLP for liability) over the LLC for FLPs.
A second reason: industries where LP structure is the convention. Real estate syndications, oil and gas partnerships, hedge funds, and private equity funds historically use the LP form. The LLLP lets the syndicator preserve the conventional structure while gaining liability protection at the GP level.
A third reason: published case law on LP-specific drafting issues (admission of new partners, withdrawal, dissolution, charging-order remedies) is deeper than for LLCs in many states. Counsel may be more comfortable advising on the LP form than the LLC.
For most operating businesses without these specific reasons, the LLC is simpler and equally protective. The LLLP shines in estate planning, real estate, and other passive-investment structures.
Sample LLLP Agreement Provisions
The Estate-Planning Use Case
The cleanest use of the LLLP form is family wealth planning. An LLLP can serve all the functions of a family limited partnership (consolidation of family assets, valuation discounts for gifts of LP interests, charging-order asset protection) while eliminating the historic need to interpose a corporate or LLC general partner.
In the traditional FLP setup, the parents formed an LLC to serve as the FLP’s general partner, with the parents as managers of the LLC. The LLC GP had a small (1-5%) partnership interest. This structure works but is operationally awkward: two separate entities, two sets of annual filings, two sets of formalities to observe.
In an LLLP setup, the parents serve as general partners directly, with the LLLP liability shield protecting their personal assets. The LP interests are held by family members (children, grandchildren, trusts) and the parents’ GP interest carries management authority. One entity instead of two; the same liability protection.
For full coverage of the FLP planning patterns, see the family limited partnership page. The principal takeaways for the LLLP variant: form in an LLLP-permitting state; check whether the state where the FLP holds assets recognises foreign LLLPs; observe formalities to avoid §2036 retained-control challenges, just as with a traditional FLP.
Authoritative Sources
- Uniform Limited Partnership Act (2001), §404 (limited liability of general partner in LLLP). Uniform Law Commission.
- 6 Del. C. §17-214 (Delaware LLLP). Delaware Code Online.
- F.S. §620.1102 (Florida LLLP). Florida Legislature.
- Tex. BOC §153.351 (Texas LLLP). Texas Legislature.
- Treas. Reg. §301.7701-3 (entity classification rules).
FAQ
What is an LLLP?
A limited liability limited partnership (LLLP) is a limited partnership in which the general partner enjoys the same liability shield as the limited partners. It is the LP analog of an LLP. The LLLP retains the two-tier LP structure (general partner with management authority, limited partners as passive investors) but eliminates the general partner's exposure to unlimited personal liability for partnership obligations. The LLLP is not available in every state and was not part of the original Uniform Limited Partnership Act; it was added by the 2001 ULPA revision and adopted by approximately 25 states.
Which states allow LLLPs?
Approximately 25 states recognise LLLPs. Major LLLP-permitting states include Delaware, Florida, Texas, Georgia, Colorado, Arizona, Hawaii, Iowa, Kentucky, Maryland, Minnesota, North Carolina, North Dakota, Oklahoma, South Dakota, Tennessee, Virginia, and Wyoming. Major states that do NOT recognise LLLPs include California, New York, and New Jersey, where the LLLP form is not available. A partnership formed in an LLLP-permitting state generally retains its LLLP status when registered to do business in a non-LLLP state under the internal-affairs doctrine, but there is some uncertainty in states that have not adopted clear LLLP-recognition rules.
What is the difference between an LLLP and an LLC?
Both provide limited liability for all members. The LLLP retains the two-tier structure with one or more general partners (with management authority) and one or more limited partners (passive); the LLC has a single class of members with the operating agreement defining management. For estate planning purposes, the LLLP often produces clearer valuation-discount support because the LP/GP structure is well-established in case law. For ongoing operating businesses, the LLC is administratively simpler and more flexible. For real estate or other passive-investment vehicles, either works; the choice often turns on state filing fees and tax treatment specifics.
How do you form an LLLP?
By filing a certificate of limited partnership with the state secretary of state that explicitly elects LLLP status. Most LLLP-permitting states require the certificate to state that the partnership is a limited liability limited partnership and to include LLLP (or L.L.L.P.) in the partnership name. The filing fee is comparable to forming an LP, typically $100-$500. The partnership agreement is then negotiated among the partners; the agreement governs internal affairs but the LLLP status comes from the public filing, not the agreement.
How is an LLLP taxed?
An LLLP is taxed as a partnership by default under Treas. Reg. §301.7701-3, the same as any other unincorporated entity with two or more members. The LLLP files Form 1065, issues Schedule K-1 forms to each partner, and operates under Subchapter K. The LLLP can elect corporate tax treatment by filing Form 8832, or elect S-corporation treatment by filing Form 2553 (if it meets the eligibility requirements), but these elections are unusual. For nearly all LLLP planning purposes, the LLLP is treated identically to a standard LP for tax purposes; the differences are state-law liability and formation requirements.
Form an LLLP
LLLP filings vary state by state; confirm current state law and engage counsel before forming.