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. The Delaware Statutory Trusts are established with a particular purpose for the investment in real estate and with a more bias on 1031 exchanges.
Under this statutory trust, the investors all own a pro rata share of the DST. 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. One other important fact about the DST is that it is a non-taxable concern thus allows the profits and losses from the investment to e passed through to the investors in it.
When we look at their relation to the 1031 exchanges, it is determined that any beneficial interest in a DST is considered as a direct interest in a real estate investment. The essence of all this is that your DST held properties are qualifying for 1031 exchanges for as long as you have them satisfying the other demands for the same exchanges. As such we can say that for investors who will to get into the real estate business but are however not ready to face the responsibilities these decisions bring, then they have a very good alternative for investment in the DST. Let’s see some of the benefits of a DST.
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.
The other benefit of the DST is the fact that it eliminates the requirement for a unanimous approval. The decision making over the property held under the DST lies in the powers of the signatory trustee and as such relieving the investors of the responsibility over the property so held.
Limited personal liability is the other advantage of the DST investments. 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.