DST 101: Delaware Statutory Trusts

A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware statutory law. Delaware law provides great flexibility in the design and operation of the entity. However, to use a DST in a Section 1031 tax-deferred exchange program, it must comply with the requirements of IRS Revenue Ruling 2004-86 so that a beneficial interest in the trust is treated as a direct interest in real estate for tax purposes. The trust also must satisfy lender requirements, especially if the loan is to be securitized.