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.
The beauty of a DST is that with it each individual shareholder actually gets to own an equitable share of the DST anyway. The DST will then hold rights in real estate concerns and they will earn income from such real estate concerns and the income so earned will be distributed to the DST investors as per their allotted 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.
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. This basically means that the properties held as DST properties qualify for 1031 exchanges for as long as the other requirements for the 1031 exchanges are met. 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.
DST’s are as well a popular alternative for the reason that it will eliminate the need with commonly held properties which will demand for a unanimous approval. Every necessary decision concerning the property held under the DST is made by the signatory trustee and not the investors themselves.
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.