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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. 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.
The DST operates in such a manner as to free the investor of the responsibility of taking decisions relating to the investment as it always has a trustee who is charged to oversee these on their behalf. 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. 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. 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.
The other benefit of the DST is the fact of limited personal 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.