All You May Need To Know About Delaware Statutory Trusts And 1031 Exchanges
The Delaware Statutory Trusts also known as DST are, as can be told by the name, state entities established under the state laws of the state of Delaware and as such operate as legal entities. DST is particularly established for the sake of investment in real estate market and tends to have a more keen emphasis on 1031 exchanges.
The beauty of a DST is that with it each individual shareholder actually gets to own an equitable share of the DST anyway. With the trust, it turns to hold rights in various real estate interests and with the incomes coming from these real estate interests so held by the DST, the investors will in turn receive their equal share of income from them all in proportion to their shares in the DST.
With the DST, the individual investor is freed of the responsibility of making decisions relating to the investment for these are concerns which are handled by the assigned trustee who makes all these on behalf of the DST investors. The other important fact to consider about the DST is the fact that it is a non-taxable entity and as such the incomes and losses eared from the trust is passed to the investors.
Looking at their standing in relation to the 1031 exchanges, you will notice that there is a determination that considers the interests in DST as identical to interests in direct real estate investment. To put it simply, the property held under DST will be qualifying for 1031 exchanges in the event that they will have satisfied the other general requirements under the 1031 exchanges. For this reason we can see the DST option as being quite ideal and super an option for the investor who wishes to settle for the investment in real estate but has some constraints and fears over time and management issues with the property. Following are some of the advantages attracting a number to DST’s.
One of the main benefits of the DST is the idea that it allows the investors an opportunity to hold a share in a property which is securitized.
A DST is as well beneficial for the fact that that it just well enough does away with the need to have a unanimous approval as is always the case with properties held in common interests before any decision is taken concerning the property. In case there is a decision to be taken over the held property, the investors basically have no part to play in this and the responsibility does not lie with them as the party to take the decisions is the assigned signatory trustee.
One more benefit of the DST’s is the element of the limits it gets to cases of liability. In the event of a bankruptcy of the trust, the loss or the assets which can be attached as to the bankruptcy are those of the investors which were in the concerned trust and do not extend to the any other asset outside of the trust gone bankrupt.