Florida Limited Liability Companies (LLC), Limited Liability Partnership (LLP) and Limited Liability Limited Partnership (LLLP)


Significant changes were made in 1999 to the Florida Limited Liability Company Act (Chapter 608) Florida Statutes, to the Florida Revised Uniformed Limited Partnership Act (Chapter 620.101) and to the Revised Uniform Partnership Act of 1995 (Chapter 620.81001). These changes are significant from an asset protection view point as follows:

1. General Partnership.

Florida Statute Section 620.9001, provides that a general partnership may become a limited liability partnership by first obtaining a required vote of the partners and then filing a statement of qualification with the Department of State. F.S § 620.9001 (2000). Florida Statute Section 620.8101, defines limited liability partnership as “a registered limited liability partnership registered under §§ 620.78-620.789 immediately prior to the effective date of this act or a partnership that has filed a statement of qualification under § 620.9001 and has not filed a similar statement in any other jurisdiction.” F.S. § 620.8101 (2000). This means a partner in a general partnership can take advantages of the protection of a limited liability partnership once approved by the other partners and a statement of qualification has been filed. An obligation incurred as a limited liability partnership is solely the obligation of the partnership. F.S. § 620.8306(3) (2000). An action may be brought against the partnership or any or all of the partners. F.S. § 620.8307 (2000). A partner will not b e held personally liable, directly or indirectly, by way of contribution, for such an obligation solely by reason of being or acting as a partner. Id. A judgment creditor of a partner may perfect a judgment lien but may not proceed against the assets of the partner to satisfy a judgment arising from a partnership obligation, unless the partner is personally liable. F.S. § 620.8307(4) (2000). 


Limited Partnerships.

Florida Statute Section 620.187, provides rules for a limited liability limited partnership. A limited partnership may become a limited liability limited partnership by obtaining the approval of the limited partners by the vote necessary to amend the limited partnership agreement and must file a statement of qualification pursuant to section 620.9001(3) of the Florida Statutes. The newly formed limited liability limited partnership must also comply with Florida Statute § 620.9002, which reflects how the partnership name should end. F.S. § 620.187(1) (2000). Florida Statute Sections 620.8306(2) & (3), apply to both general and limited partners of a limited liability limited partnership. F.S. § 620.187(3) (2000). Both general and limited partners are protected from liability and will not be held personally liable for an obligation of the partnership. F.S. § 620.8307.

3. Definition

Florida LLCs are organized under Fla. Stat. Chapter 608. An LLC is a hybrid entity, in that it combines the limited liability of a corporation with the flow-through taxation of a partnership. Articles of Organization must be filed with the Secretary of State of Florida. The LLC statute was amended in 1998 and 1999 to enhance the benefits of using LLCs. In addition, in 1999 Florida Statutes 620 was amended to permit a general partnership to become a limited liability partnership (Fla. Stat. Sec. 620.9001) and for a limited partnership to become a limited liability limited partnership. Fla. Stat. Sec. 620.187. The amendments resulted in beneficial Florida income tax and Federal estate tax treatment, as well as enhanced asset protection. For the reasons stated below, the author generally continues to use family limited partnerships in many cases.


Limited Liability Company

Florida State 608 concerning limited liability companies was also amended. Neither members nor managers are liable, by reason, of being a member or serving as a manager, under a judgment, decree, or order for a debt, obligation or liability of the limited liability company. F.S. §§ 608.4227(1) (2000) & 608.436 (2000). The managers and members are also not liable to the limited liability company or to any other member or manager for the member’s or manager’s good faith reliance on the provisions of the limited liability company’s articles of organization or operating agreement. F.S. § 608.4227(2) (2000). Any judgment creditor of a member is limited to a charging lien and is typically afforded to the member’s interest in a limited liability company. F.S. § 608.433(4) (2000). Under Florida Statute Section 608.433(4), the judgment creditors right’s are limited only to an assignment of such an interest in the limited liability company. The assignment of an interest in a limited liability company is subject to member approval. F.S. § 608.432(1) (2000). The assignee can partake in such profits and losses, to receive such distribution or distributions, and to receive such allocation of income, gain. loss, deduction, or credit or similar item to which the assignor was entitled. F.S. § 608.432(2)(b) (2000). As provided in Florida State Section 608.432(2)(a) (2000), the assignee cannot exercise any rights or powers of a member unless the assignee becomes a member. By the unanimous consent of all the members other than the member assigning the interest an assignee can become a member of a limited liability company. F.S. § 608.433(1) This consent must be in writing. F.S. § 608.4232 (2000).


Current Disadvantages of Using LLCs – Florida Annual Intangible Tax

Florida exempts most partnership interests from its intangible tax, which effective on January 1, 2001 is $1 per $1,000 of value of intangible assets. However, Florida levies the intangible tax on LLC interests. Accordingly, if an LLC owns marketable securities, it can be subject to double Florida intangible taxes:  once at the LLC level and then at the level of the owners of the LLC. It is possible that this distinction will be removed in the future. Furthermore, an owner of an LLC that owns real estate is also subject to intangible tax based upon the fair market value of the LLC interests. No such intangible tax would be incurred by the owned of limited partnership interests.

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