Using a dST For Estate Planning Purposes 

For many real estate investors or rental property owners, they do not own just one property. Most of our clients own 5,10,15,20, or even 300 for one of our clients. We have found that todays generation has no interest in becoming landlords and managing a single rental property, and certainly not 50. Real estate investors who own multiple properties are worries to sell their real estate and succumb to the capital gains tax. These properties could have a low or no cost basis, exposing them to exorbitant amount of capital gains tax to the state and federal government. This is where the Delaware Statutory Trust can defer the capital gains tax, provide passive monthly income, depreciation benefits, and even appreciation potential at disposition. The Delaware Statutory Trust can solve the capital gains tax issue. How does the 1031 DST solve the estate planning for the investors beneficiaries? 

The Delaware Statutory Trust Is Used For Estate Planning 

For the heirs who do not want to manage inherited investment properties, the Delaware Statutory Trust can solve this problem. If a real estate investor had 20 or properties held in their estate, and the investor dies, the beneficiaries inherit the properties at a stepped up basis. This is a great tax advantage for those inheriting the properties. The problem becomes, if the beneficiaries inherit the properties, and do not want to manage the properties, they must start to sell them off. This could be timely process to sell all of the properties held in the estate. If there are multiple beneficiaries, it could be difficult to split the proceeds. If not all beneficiaries want to sell the properties, it could lead to a legal battle. If the current owner of the investment properties decides to sell off the properties one by one, or in a package deal, they could be placed in a Delaware Statutory Trust. The real estate investor has all the control of the properties, the capital gains taxes are deferred using the Delaware Statutory Trust. All of the investment properties are sold off, and now held in the name of the trust. When the owner of the trust dies, the beneficiaries inherit the Delaware Statutory Trust at a stepped up cost basis at the fair market value at the date of death. Problem solved using the Delaware Statutory Trust Estate Planning purposes. 

What can the beneficiaries do with the proceeds?

Here is the great part about using the Delaware Statutory Trust Estate Planning purposes-  When the beneficiaries inherit their share of the Delaware Statutory Trust, they can decide individually what they would like to do with their percentage. If there are 3 kids that inherit the Delaware Statutory Trust in the estate, each can do what they please. They can either-

• Stay Invested in the Delaware Statutory Trust
• Continue to receive the passive monthly income  
• Redeem their value at disposition 
• Keep a portion in the DST, take the rest in cash
• 1031 exchange out of the DST nd buy physical property 

Giving the beneficiaries these options can keep the family out of a legal battle when it comes to splitting up the real estate assets in the estate. We have many clients who love the aspect of the Delaware Statutory Trust Estate Planning purposes. We have helped build a comprehensive strategy to dispose of the investment properties over time. This comprehensive strategy helps to minimize tax ramifications, fees, and over diversification. If you are looking to liquidate your real estate portfolio for estate planning purposes, please reach out to us and we can assist in generating a comprehensive strategy. Please fill out the form below, or call our office directly at 805-603-4378 to speak to a representative today!