The Essentials of Investments – 101
All You May Need To Know About Delaware Statutory Trusts And 1031 Exchanges
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 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.
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. Mark this other yet very important fact about the trusts which is concerned with their taxable position and they are considered as entities which are non-taxable which therefore means that the profits and losses accrued from the trusts are passed through 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. To put it simply, the property held under DST will be qualifying for 1031 exchanges in the event that they will have satisfied the other general requirements under the 1031 exchanges. Thus we can say that the investors who wish to get into real estate holdings and want to stay away from the responsibilities of making decisions and the management duties they have a very suitable option in the DST to invest in this market. 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. 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 the event of a bankruptcy of the trust, the loss or the assets which can be attached as to the bankruptcy are those of the investors which were in the concerned trust and do not extend to the any other asset outside of the trust gone bankrupt.