DSTs: A Powerful Tool for CPAs to Enhance Client Value

For Cer­ti­fied Pub­lic Accoun­tants (CPAs), the abil­i­ty to deliv­er val­ue goes far beyond prepar­ing tax returns and ensur­ing com­pli­ance. In many con­sumer sur­veys CPAs are regard­ed as a most trust­ed advi­sor. Today’s clients, par­tic­u­lar­ly high-net-worth indi­vid­u­als and real estate investors, expect strate­gic guid­ance that helps them pre­serve, grow, and trans­fer wealth effi­cient­ly.

April 1, 2026

By Al DiNi­co­la, AIF®
adinicola@fiduciarycm.com
Pri­vate Fund Advisor/DST 1031 Spe­cial­ist
Fidu­cia­ry Cap­i­tal Man­age­ment ^®, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

Intro­duc­tion

One increas­ing­ly impor­tant tool in that con­ver­sa­tion is the Delaware Statu­to­ry Trust (DST). We par­tic­i­pate reg­u­lar­ly with CPA in edu­ca­tion­al and net­work­ing oppor­tu­ni­ties. It has been report­ed that when CPAs are proac­tive rather than reac­tive there is a greater poten­tial for client reten­tion. The Sleeter Group (a well-known account­ing research and edu­ca­tion orga­ni­za­tion) key find­ing 72% of small busi­ness own­ers said they changed their CPA or account­ing firm at least in part because the ser­vice was “reac­tive” instead of proac­tive.

Under­stand­ing DSTs is not a niche spe­cial­iza­tion, it is a prac­ti­cal way for CPAs to ele­vate their advi­so­ry role. DSTs inter­sect with tax defer­ral, pas­sive income plan­ning, retire­ment strate­gies, and estate struc­tur­ing. By becom­ing knowl­edge­able in this area, CPAs can pro­vide more holis­tic, for­ward-think­ing advice that strength­ens client rela­tion­ships and posi­tions them as indis­pens­able finan­cial part­ners. The Sleeter study added that Account­ing is mov­ing from com­pli­ance to more advi­so­ry.

Why CPAs Should Know DSTs

DSTs have gained pop­u­lar­i­ty large­ly due to their role in §1031 like-kind exchanges. How­ev­er, their rel­e­vance extends well beyond that sin­gle use case. How­ev­er, we always advise that DSTs are not for every­one.

1. IRS-Approved Replace­ment Prop­er­ty for 1031 Exchanges
DSTs are rec­og­nized by the IRS (under Rev­enue Rul­ing 2004–86) as qual­i­fy­ing replace­ment prop­er­ty for 1031 exchanges. This allows investors to defer cap­i­tal gains tax­es when sell­ing invest­ment real estate and rein­vest­ing pro­ceeds into DST inter­ests.

2. Tax Defer­ral Oppor­tu­ni­ties
For clients fac­ing sig­nif­i­cant cap­i­tal gains from the sale of real estate, DSTs offer a viable path to defer tax­es. This can be espe­cial­ly valu­able in high-appre­ci­a­tion sce­nar­ios where imme­di­ate tax lia­bil­i­ty would oth­er­wise erode a sub­stan­tial por­tion of pro­ceeds.

3. Pas­sive Income Solu­tions
DSTs are pro­fes­sion­al­ly man­aged, mean­ing clients can receive income dis­tri­b­u­tions with­out the respon­si­bil­i­ties of active prop­er­ty man­age­ment. This makes them par­tic­u­lar­ly attrac­tive for retirees or clients seek­ing to tran­si­tion away from land­lord duties.

4. Estate Plan­ning and Wealth Trans­fer Ben­e­fits
DST inter­ests can play a role in estate plan­ning by sim­pli­fy­ing own­er­ship struc­tures. When held until death, they may also qual­i­fy for a step-up in basis, poten­tial­ly elim­i­nat­ing deferred cap­i­tal gains for heirs.

How CPAs Can Add Val­ue

CPAs are unique­ly posi­tioned to con­nect the dots between tax strat­e­gy, invest­ment deci­sions, and long-term plan­ning. By under­stand­ing DSTs, they can pro­vide val­ue in sev­er­al key ways. CPAs who also con­tin­ue their edu­ca­tion and insight into advi­sors who can assist in the process.

1. Iden­ti­fy­ing Ide­al Can­di­dates
CPAs often have the clear­est view of a client’s finan­cial sit­u­a­tion. They can proac­tive­ly iden­ti­fy clients who may ben­e­fit from a DST strat­e­gy, such as:

• Real estate investors near­ing a sale
• Clients tired of active prop­er­ty man­age­ment
• Indi­vid­u­als with con­cen­trat­ed real estate hold­ings
• Retirees seek­ing sta­ble, pas­sive income

2. Coor­di­nat­ing with Key Pro­fes­sion­als
A suc­cess­ful 1031 exchange involv­ing DSTs requires coor­di­na­tion among mul­ti­ple par­ties, includ­ing Qual­i­fied Inter­me­di­aries (QIs), finan­cial advi­sors, attor­neys, and DST spon­sors. CPAs can serve as the cen­tral coor­di­na­tor, ensur­ing time­lines are met and com­pli­ance is main­tained.

3. Mod­el­ing Tax Out­comes
One of the most valu­able ser­vices a CPA can pro­vide is sce­nario analy­sis. By mod­el­ing:

• Cap­i­tal gains tax lia­bil­i­ties with and with­out a 1031 exchange
• Depre­ci­a­tion recap­ture impacts
• Future tax impli­ca­tions of DST income

CPAs help clients make informed, data-dri­ven deci­sions.

4. Review­ing DST Struc­tures for Com­pli­ance
While CPAs are not respon­si­ble for select­ing invest­ments, they can review DST offer­ings from a tax and struc­tur­al per­spec­tive. This includes under­stand­ing:

• How income and depre­ci­a­tion are allo­cat­ed
• The impli­ca­tions of financ­ing with­in the DST
• Com­pli­ance with IRS guide­lines

This added lay­er of dili­gence enhances client con­fi­dence and reduces risk.

Best Prac­tices for CPAs

To effec­tive­ly incor­po­rate DST strate­gies into their prac­tice, CPAs should adopt a few key best prac­tices:

Stay Cur­rent on IRS Guid­ance
A strong under­stand­ing of Rev­enue Rul­ing 2004–86 and relat­ed IRS reg­u­la­tions is essen­tial. DST rules are spe­cif­ic, and com­pli­ance is crit­i­cal to main­tain­ing tax-deferred sta­tus.

Incor­po­rate DST Dis­cus­sions into Annu­al Plan­ning
Rather than react­ing to a prop­er­ty sale after the fact, CPAs should proac­tive­ly raise DST strate­gies dur­ing annu­al reviews, espe­cial­ly when clients are con­sid­er­ing sell­ing appre­ci­at­ed assets.

Inte­grate with Broad­er Finan­cial Plan­ning
DSTs should not be viewed in iso­la­tion. Instead, they should be eval­u­at­ed along­side:

• Retire­ment income needs
• Risk tol­er­ance
• Estate plan­ning objec­tives
• Over­all port­fo­lio diver­si­fi­ca­tion

This ensures that DST rec­om­men­da­tions align with the client’s long-term goals.

Edu­cate Clients Clear­ly
DSTs can be com­plex. CPAs who can explain them in sim­ple, prac­ti­cal terms—highlighting both ben­e­fits and limitations—build trust and cred­i­bil­i­ty.

Con­clu­sion

In an increas­ing­ly com­plex finan­cial land­scape, CPAs who expand their knowl­edge beyond tra­di­tion­al tax prepa­ra­tion stand out as true advi­sors. Delaware Statu­to­ry Trusts offer a pow­er­ful oppor­tu­ni­ty to help clients defer tax­es, gen­er­ate pas­sive income, and stream­line wealth trans­fer strate­gies.

By under­stand­ing how DSTs work and inte­grat­ing them into com­pre­hen­sive plan­ning, CPAs can deliv­er mean­ing­ful, mea­sur­able val­ue. More impor­tant­ly, they posi­tion them­selves as trust­ed partners—guiding clients through crit­i­cal finan­cial deci­sions while pre­serv­ing wealth and ensur­ing com­pli­ance.

In short, mas­ter­ing DST strate­gies isn’t just an added skill, it’s a strate­gic advan­tage.

Fidu­cia­ry Cap­i­tal Man­age­ment (Fidu­cia­ry CM^®) is a SEC reg­is­tered invest­ment advi­so­ry firm that pro­vides com­pre­hen­sive port­fo­lio man­age­ment, finan­cial plan­ning, and fidu­cia­ry deci­sion-mak­ing ser­vices on behalf of retire­ment plan spon­sors. Our Dif­fer­ence is sum­ma­rized by our fidu­cia­ry approach which enables us to bet­ter meet port­fo­lio and retire­ment plan objec­tives, result­ing in stronger risk adjust­ed returns for investors and peace of mind for Clients. We also focus on alter­na­tive real estate invest­ment. Many real estate investors are seek­ing tax deferred solu­tions uti­liz­ing §1031 exchanges or Oppor­tu­ni­ty Zones.

DSTs are not for all investors.  The acqui­si­tion of a DST is for accred­it­ed investors only.  Con­tact your invest­ment advis­er for addi­tion­al details on how a DST may be a solu­tion to your §1031 Exchange and suit­ed for your invest­ment future. For more infor­ma­tion on how to prop­er­ly set up an IRC §1031Tax Deferred Exchange or if you are an accred­it­ed investor and would like addi­tion­al infor­ma­tion on a DST con­tact Al DiNi­co­la at 239–691-8098 or email adinicola@fiduciarycm.com

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