The state of Delaware has a strong history of innovation in protecting the personal wealth of both residents and non-residents through both its corporate laws, and its trust statutes. The state’s
work in trust law has helped investors maximize their investment return while protecting it from creditors and saving income tax. In addition, because the Delaware Court of Chancery has exclusive jurisdiction over matters of equity, should a trust dispute ever arise, Delaware also has the system in place to resolve it effectively and justly. Other states have enacted statutes to recognize business trusts, but Delaware was, and remains, the leader in statutory trust entity and continues to outperform other states. Large corporations and wealthy individuals have used Delaware’s advantages to their benefit for years, but investors with small equity are able to reap the benefits of these statutes as well.
Why DSTs Are Important For Small Equity InvestorsWhen investors, small and large, are looking to arrange an
asset-backed financing or establishing a titling trust, they need to identify an entity to hold the assets being financed. That entity will be the center for all structured finance transactions.
The
simple filing requirements of a Delaware Statutory Trust protect investors. Because the DST certificate shows only the name of the trust and the name and address of the Delaware trustee, the identities of the beneficial owners of the trust can remain private and protected. After a one-time fee due upon filing the certificate of trust, there are no annual fees or additional filing requirements.
While the trust does require a Delaware resident trustee, all management of the trust can be delegated to out of state co-trustees and managers, allowing for flexibility and reducing time and travel requirements for individual investors. Investors can deposit their
1031 exchanges into the DST, or can purchase a
dst small equity.
DSTs allow the parties involved to decide the details of the business relationship, thus giving investors the freedom and flexibility to determine what best meets their needs. Investors are protected from liability because DST members and managers have no personal liability for the debts and obligations of the trust.
DSTs can be structured to be a tax efficient alternative to corporations, as they do not have to be subject to tax at the organizational level.
