A limited liability limited partnership (LLLP) is a type of limited partnership with more protection than just a limited partnership offers.
Limited partnerships offer protection to limited partners in that they cannot be personally liable beyond the assets actually invested in the partnership. However, a limited partnership must have at least one general partner whose personal liability for partnership debts is unlimited.
To get around the unlimited personal liability, individuals could elect themselves as managers of a specially set up limited liability company that was appointed the general partner of the limited partnership. In that case, if the limited partnership became insolvent, the general partner/LLC would be on the hook, but since it would have very few assets, it could declare bankruptcy, and the individual managers of the LLC could move on without risking their own personal assets.
An LLLP achieves the same effect but without the additional expense, paperwork, taxes, and other government filings associated with creating a multi-layered entity.
An LLLP is a relatively new form of entity that shields the general partner from personal liability for debts incurred by the partnership. It has the same protective effect of setting up multiple layers of entities, but is a simpler, more elegant approach.
Just over half of the states in the U.S. will allow the formation of an LLLP. In Nevada, the additional protections of an LLLP over a traditional LP will cost you $25 extra for the initial registration and an extra $50 for the annual report filing—a very modest fee considering the added protection. That's almost like buying unlimited personal liability insurance that has a $50 annual premium.
When you establish your business as a limited liability limited partnership, you can move forward with peace of mind knowing that the only assets you are risking are those you invest in the business.