What is a Delaware statutory trust?

How does DST ownership work?

In a real estate DST offering, investors acquire beneficial interests in a trust rather than individually managing the underlying building. The trust holds the property under its governing documents. A sponsor and other contracted parties organize and manage the investment. An investor's percentage interest, economic rights and restrictions are determined by those documents.

This arrangement can appeal to an owner seeking to reduce direct landlord responsibilities. It does not remove real estate risk. Rent collections, tenant demand, financing costs and operating expenses still matter. A professionally managed property can lose value, and a distribution can be reduced or suspended.

Winthco’s overview of Delaware statutory trusts connects this ownership structure to the firm’s broader planning services.

Can a DST qualify for a 1031 exchange?

IRS Revenue Ruling 2004-86 addresses a particular trust arrangement in which beneficial interests are treated as interests in real property for federal tax purposes. The ruling is not blanket approval for every trust carrying the DST label. The structure, permitted activities and investor's transaction must satisfy the applicable rules.

Section 1031 generally concerns real property held for investment or productive use in a trade or business. Property held primarily for sale does not qualify. Your qualified intermediary, CPA and legal adviser should evaluate the proposed replacement interest and transaction before closing. Tax deferral is different from eliminating tax.

What changes when you stop managing the property?

With directly owned rental property, the owner may decide when to refinance, renovate or sell. A DST investor typically gives up much of that discretion. The trust agreement and offering documents govern who can make decisions and under what circumstances. Review those provisions before deciding that less management is worth the loss of control.

Liquidity is another important difference. A publicly traded security can often be sold through an established market, but a private DST interest may have no active resale market. A planned holding period is an estimate, not a promise that your cash will become available on a particular date.

What should you examine before investing?

Begin with the private placement memorandum and its risk factors. Review the property or portfolio, tenant concentration, lease terms, debt maturity, reserves, fees, conflicts of interest and assumptions used in the financial projections. Ask which payments compensate the sponsor and which are property operating expenses.

Look at the entire household portfolio. Owning several interests does not necessarily provide meaningful diversification if their tenants, markets, financing or sponsors are closely related. Consider how much readily available cash remains outside the investment for expenses and emergencies.

For a closer look at the documents involved, read how to evaluate a DST before discussing a specific offering.

What does accredited investor status mean?

Many private real estate offerings rely on securities-law exemptions and may be limited to accredited investors. The applicable exemption and offering terms determine eligibility. Accredited status is not a government endorsement of an investment, proof of suitability or protection against loss.

Do not assume every investor must meet the same single income test. Federal rules include different qualifying categories. Ask the offering's authorized representative which requirements apply, how eligibility is verified and what information is needed. Avoid sending sensitive verification documents through ordinary email.

How should you start a conversation?

Gather your property's expected closing date, ownership structure, estimated proceeds, mortgage payoff and investment objectives. Identify how much cash you need to keep accessible and the responsibilities you hope to reduce. These facts make an initial discussion more useful than starting with a distribution target.

Winthco's prospect contact form helps the team organize a conversation. It does not reserve a property, establish suitability, complete a 1031 exchange or commit you to invest. Your advisers and the offering documents remain essential to the decision.

What should you ask about each decision?

Your next-step checklist

1. Define your objectives and liquidity needs.
2. Confirm transaction eligibility with your tax adviser and qualified intermediary.
3. Review the trust agreement, offering memorandum and complete fee schedule.
4. Compare the investment's risks with your existing portfolio.
5. Resolve unanswered questions before signing or transferring funds.

Frequently asked questions

Sources and further reading

• IRS Revenue Ruling 2004-86
• IRS like-kind exchange guidance
• SEC accredited investor explanation

Sources checked October 2, 2026. This article explains general concepts; your facts and the applicable documents control.

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