By Steve Haskell, Vice President at Kay Properties & Investments and The Kay Properties Team
Advisors at Kay Properties & Investments have worked closely with Estate Attorney’s to assist with their client’s legacy planning.
The Delaware Statutory Trust can offer many potential benefits to investors. Below are four reasons estate attorneys incorporate DSTs in their client’s estate planning.
Everyone’s situation is unique. All investors should speak with their tax/legal advisor when conducting their own estate planning.
1. Potential tax benefits. According to the Internal Revenue Code 1014(a), when a person (the beneficiary) receives an asset from a giver (the benefactor) after the benefactor dies, the asset often receives a stepped-up basis to the market value at the time the benefactor dies. This often applies to DSTs as well. However, everyone’s tax situation is unique, so it advised that all investors speak to their own tax professional regarding their specific situation.
2. Avoid potential burdens of property management. Many investors do not mind managing their own properties. However, they fear the potential of leaving their spouse and or family with the burden of navigating through the nuances of property management while grieving the loss of a loved one. DSTs are considered passive investments that spare investor’s loved ones and or heirs form the stresses and burdens of property management.
3. Increased flexibility in assigning inheritance. Investors may place their investment in one property or diversify* between a multitude of properties. Clients can divide the shares equally among heirs, assign each heir a property, or use a variety of different legacy planning strategies. Some clients even involve their heirs in considering the DSTs they would potentially inherit one day.
4. Prevents infighting between heirs. Most estate attorneys have frightening stories of family feuds resulting from inheritance conflicts. A daughter may want to take over the management of her parent’s investment properties, but the other siblings wish to liquidate and pay off debt. A son may desire to keep the parent’s beach rental, but his sister needs the money to pay for her kid’s college. This often causes devastating consternation to exacerbate an already stressful situation.
DST are not suitable for everyone. However, for many heirs, DSTs may provide a turn-key options for passive income and offer the flexibility to choose what they wish to do with their inheritance without impeding on the priorities of the other heirs.
If you wish to learn more about whether DSTs are an appropriate option for you or your clients, contact Kay Properties and Investments at www.kpi1031.com or 1 855- 899- 4597.
*Diversification does not guarantee profits or protect against losses.