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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. 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.

The fact that the DST properties are securitized, this means that the investor gets an opportunity to have a share to owning such kinds of securitized holdings in investments.

The other benefit of the DST is the fact that it eliminates the requirement 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.

Limited personal liability is the other advantage of the DST investments. 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.

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