Utilizing Delaware Delaware Statutory Trusts In Real Estate Planning
Real estate planning is an essential part of wealth management. There are different types of trusts that can be used in real estate planning, such as Delaware Statutory Trusts (DSTs). DSTs are becoming increasingly popular among real estate investors due to their flexibility and tax benefits. In this article, we will discuss the advantages of utilizing DSTs in real estate planning.
What are Delaware Statutory Trusts?
DSTs are a type of trust that is created under Delaware law. They are commonly used in real estate investments to hold title to investment properties. DSTs allow multiple investors to pool their funds together to invest in a property. Each investor owns a beneficial interest in the trust and receives a share of the income generated by the property.
Tax Benefits of DSTs
DSTs offer several tax benefits to real estate investors. One of the primary advantages of DSTs is that they are considered pass-through entities for tax purposes. This means that the income generated by the property is passed through to the investors, who are then responsible for paying taxes on their share of the income.
Another tax benefit of DSTs is that they allow investors to defer capital gains taxes. When a property is sold, the investors can roll over their proceeds into another DST property, deferring the payment of capital gains taxes until they sell their interest in the final DST property.
Flexibility of DSTs
DSTs offer investors flexibility in terms of investment options. They can invest in a variety of real estate assets, including apartment buildings, office buildings, retail centers, and industrial properties. Investors can also choose the amount of money they want to invest, which allows them to diversify their portfolio.
DSTs also offer flexibility in terms of management. The sponsor of the DST is responsible for managing the property, which allows investors to have a passive investment. The sponsor is also responsible for handling all of the day-to-day operations of the property, including leasing and maintenance.
Protection of Assets
DSTs offer protection of assets to investors. When a property is held in a DST, the investors' liability is limited to their investment in the trust. This means that if there is a lawsuit or other legal action taken against the property, the investors' personal assets are protected.
Estate Planning Benefits
DSTs offer estate planning benefits to investors. When an investor passes away, their beneficial interest in the trust can be transferred to their heirs without going through probate. This allows for a smooth transfer of assets and helps to avoid delays and expenses associated with probate.
Conclusion
DSTs are a popular choice among real estate investors due to their flexibility, tax benefits, and asset protection. They offer investors the ability to invest in a variety of real estate assets and the opportunity to diversify their portfolio. DSTs also offer estate planning benefits, making them an attractive option for investors who want to pass their assets on to their heirs. If you are considering using a DST in your real estate planning, it is important to consult with a financial professional to determine if it is the right choice for your investment goals.