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. 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.
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. 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. 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.
The other benefit of the DST is the fact that it eliminates the requirement 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.
The other benefit of the DST is the fact of limited personal liability. In case of a bankruptcy, the liability to be borne by the investors do not go past the investments in the trust.