What You Should Know About Delaware Statutory Trusts
The laws in the state of Delaware have instituted the trusts which operate as trusts known as the Delaware Statutory Trusts. 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 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. 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.
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. 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. 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. 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. 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.
Limited personal liability is the other advantage of the DST investments. In case of a bankruptcy, the liability to be borne by the investors do not go past the investments in the trust.