What You Should Know About Delaware Statutory Trusts
The Delaware Statutory Trusts is, as is suggested by the name, a legal entity which is created as a trust under the Delaware state laws. A DST is especially established for real estate investment purposes and is more specifically targeting the 1031 exchanges.
The DST allows the individual investors to own an equitable share of the trust itself. The Delaware Statutory Trust will then hold title in real estate interests and whenever there is income earned from the real estate investments it holds trusts in, the investors will receive income shared and appropriated to them as per their share allocations 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. Thus we can say that the investors who wish to get into real estate holdings and want to stay away from the responsibilities of making decisions and the management duties they have a very suitable option in the DST to invest in this market. Following are some of the advantages attracting a number to DST’s.
Among some of the benefits of the DST is the fact that they are getting the investors an opportunity to own a share in a securitized priority.
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. Where there is the trust going bankrupt, the liability resting on the investors is limited to their investment in the trust and not any liability past this is legal.