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Formation Of A Delaware Statutory Trust

Formation Of A Delaware Statutory Trust

Savvy investors understand that real estate ownership through a Delaware Statutory Trust brings unique benefits not found in other forms of investing that involves real estate.

While many investors will simply participate in already-formed DSTs, some will choose to create their own. In either case, it is helpful to understand how such trusts are formed. Four key elements are required for a valid Delaware Statutory Trust.

The Governing Instrument – This is the written documentation that specify the creation and internal affairs of the trust, as well as govern the conduct of trust activities. This must be in writing and executed on or before filing the Certificate of Trust.

Certificate Of Trust – Each DST must have its own Certificate of Trust filed with the Delaware Secretary of State. It must contain the name of the trust as well as the name and address of one trustee in the State of Delaware.

Trustees – Every DST must have at least one trustee, although more are permitted. The trustee can also be a beneficial owner and can be an individual or business entity.

Beneficial Owners – These are the individuals who own a beneficial interest in the trust. There can be one or more.