Why Delaware Statutory Trusts Are Becoming Popular

Florham Park partner Joseph Whitney, Philadelphia of counsel David Shechtman and Florham Park associate Angela Raleigh wrote an article for the New Jersey Law Journal titled “Why Delaware Statutory Trusts Are Becoming Popular.” The article explores the benefits and limitations of Delaware statutory trusts (DSTs) and their use as a replacement property investment vehicle for real estate owners engaging in like-kind exchanges.

“Like-kind” exchanges allow a real estate owner to reinvest the full amount of net sale proceeds from a property disposition into a new investment while deferring recognition of capital gains. DSTs have become a popular choice for exchangers looking to reinvest sales proceeds into net-leased properties which provide a steady stream of income without property management responsibilities.

Joseph, David and Angela further discuss the rules for structuring DSTs and various prohibitions on a DST trustee’s powers and activities— known as the “seven deadly sins—which must be included in the trust instrument in order to achieve the desired tax result.

Read “Why Delaware Statutory Trusts Are Becoming Popular.”