DSTs and Trust Ownership Structures: A Powerful Estate Planning Strategy

As real estate investors accu­mu­late wealth, pre­serv­ing and trans­fer­ring that wealth effi­cient­ly becomes increas­ing­ly impor­tant. While Delaware Statu­to­ry Trusts (DSTs) have gained wide­spread recog­ni­tion for their role in Sec­tion 1031 exchanges, many investors are unaware of the sig­nif­i­cant estate plan­ning oppor­tu­ni­ties that can arise when DST inter­ests are held with­in a trust.

July 15, 2026

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

Intro­duc­tion

Trust own­er­ship struc­tures can pro­vide flex­i­bil­i­ty, pri­va­cy, con­ti­nu­ity, and asset pro­tec­tion while help­ing fam­i­lies achieve long-term wealth preser­va­tion goals. When com­bined with the pas­sive nature of DST invest­ments, trusts can cre­ate an effec­tive frame­work for man­ag­ing real estate assets across mul­ti­ple gen­er­a­tions.

For investors seek­ing to reduce estate admin­is­tra­tion chal­lenges, avoid pro­bate com­pli­ca­tions, and main­tain income for ben­e­fi­cia­ries, incor­po­rat­ing DST trust own­er­ship into a com­pre­hen­sive estate plan may offer mean­ing­ful advan­tages. Under­stand­ing how trusts and DSTs work togeth­er is essen­tial for devel­op­ing a strat­e­gy that pro­tects both assets and fam­i­ly lega­cy.

For back­ground see pre­vi­ous arti­cle: Pass­ing Real Estate Wealth to Heirs Using DSTs Click here.

Under­stand­ing DST Own­er­ship

A Delaware Statu­to­ry Trust is a legal struc­ture that allows mul­ti­ple investors to hold ben­e­fi­cial own­er­ship inter­ests in insti­tu­tion­al-qual­i­ty real estate. DSTs are com­mon­ly used as replace­ment prop­er­ty in Sec­tion 1031 exchanges and often own:

• Mul­ti­fam­i­ly apart­ment com­mu­ni­ties
• Indus­tri­al and logis­tics facil­i­ties
• Med­ical office build­ings
• Self-stor­age facil­i­ties
• Senior hous­ing com­mu­ni­ties
• Essen­tial retail prop­er­ties
• Net-leased com­mer­cial real estate

Unlike direct own­er­ship, investors do not par­tic­i­pate in day-to-day prop­er­ty man­age­ment. Pro­fes­sion­al asset man­agers over­see oper­a­tions, leas­ing, main­te­nance, financ­ing, and report­ing.

This pas­sive own­er­ship struc­ture makes DSTs par­tic­u­lar­ly attrac­tive for retirees and estate-focused investors who want con­tin­ued expo­sure to real estate with­out the bur­dens of active man­age­ment.

When these DST inter­ests are held with­in a trust, addi­tion­al plan­ning oppor­tu­ni­ties become avail­able.

What Is Trust Own­er­ship?

A trust is a legal arrange­ment in which assets are held by a trustee for the ben­e­fit of des­ig­nat­ed ben­e­fi­cia­ries.

Rather than own­ing assets direct­ly in an indi­vid­u­al’s name, own­er­ship is trans­ferred to the trust, which then man­ages and dis­trib­utes those assets accord­ing to the terms estab­lished by the grantor.

Trusts are com­mon­ly used for:

• Estate plan­ning
• Asset pro­tec­tion
• Pro­bate avoid­ance
• Wealth preser­va­tion
• Fam­i­ly lega­cy plan­ning
• Spe­cial needs plan­ning
• Tax man­age­ment strate­gies

Because DST inter­ests are gen­er­al­ly con­sid­ered per­son­al prop­er­ty inter­ests rather than direct real estate deeds, they can often be titled in the name of a prop­er­ly struc­tured trust.

This com­bi­na­tion can pro­vide investors with both the pas­sive income ben­e­fits of DST own­er­ship and the plan­ning advan­tages of trust struc­tures.

Why Investors Hold DSTs in a Trust

One of the most com­mon rea­sons investors place DST inter­ests into trusts is to sim­pli­fy future wealth trans­fer.

Many fam­i­lies own mul­ti­ple invest­ment prop­er­ties that may become dif­fi­cult to man­age, divide, or dis­trib­ute upon death. Trust own­er­ship can stream­line this process while main­tain­ing con­ti­nu­ity for ben­e­fi­cia­ries.

Sim­pli­fied Trans­fer to Ben­e­fi­cia­ries

Assets held in a trust gen­er­al­ly trans­fer accord­ing to the trust doc­u­ment rather than through pro­bate court pro­ceed­ings.

This can help reduce delays, legal expens­es, and admin­is­tra­tive bur­dens for fam­i­ly mem­bers.

Instead of requir­ing ben­e­fi­cia­ries to nav­i­gate court-super­vised trans­fers, the trustee can dis­trib­ute assets based on the grantor’s wish­es.

For fam­i­lies with mul­ti­ple heirs, this often cre­ates a smoother tran­si­tion process and reduces uncer­tain­ty.

Pro­bate Avoid­ance

Pro­bate can be time-con­sum­ing, expen­sive, and pub­lic.

Depend­ing on the state, pro­bate pro­ceed­ings may take months or even years to com­plete.

Assets prop­er­ly titled in a trust gen­er­al­ly bypass pro­bate, allow­ing ben­e­fi­cia­ries to receive their inher­i­tance more effi­cient­ly.

For investors who own sub­stan­tial real estate wealth, avoid­ing pro­bate can become a sig­nif­i­cant com­po­nent of an over­all estate plan­ning strat­e­gy.

Because DST inter­ests are often held through account reg­is­tra­tions rather than indi­vid­ual prop­er­ty deeds, trans­fer­ring own­er­ship through a trust can be espe­cial­ly effi­cient.

Main­tain­ing Pas­sive Income for Future Gen­er­a­tions

One of the most attrac­tive fea­tures of com­bin­ing DSTs and trusts is the abil­i­ty to main­tain ongo­ing pas­sive income for ben­e­fi­cia­ries.

Many investors rely on DST dis­tri­b­u­tions dur­ing retire­ment because the under­ly­ing prop­er­ties may gen­er­ate income from rents and oper­a­tions.

When DST inter­ests are trans­ferred through a trust, ben­e­fi­cia­ries may con­tin­ue receiv­ing dis­tri­b­u­tions accord­ing to the trust’s instruc­tions.

This can cre­ate sev­er­al ben­e­fits:

• Con­sis­tent cash flow for heirs
• Reduced man­age­ment respon­si­bil­i­ties
• Con­tin­ued expo­sure to insti­tu­tion­al-qual­i­ty real estate
• Poten­tial long-term wealth preser­va­tion

For fam­i­lies seek­ing to cre­ate mul­ti-gen­er­a­tional income streams, pas­sive income DST in trusts can be a com­pelling plan­ning tool.

Rather than inher­it­ing a prop­er­ty that requires active man­age­ment, ben­e­fi­cia­ries may inher­it an invest­ment struc­ture designed to gen­er­ate income while remain­ing pro­fes­sion­al­ly man­aged.

Asset Pro­tec­tion Oppor­tu­ni­ties

Asset pro­tec­tion is anoth­er con­sid­er­a­tion when eval­u­at­ing trust own­er­ship.

While asset pro­tec­tion out­comes depend heav­i­ly on state law and trust design, cer­tain trust struc­tures may pro­vide pro­tec­tion from future cred­i­tor claims, law­suits, or oth­er finan­cial risks.

Poten­tial advan­tages may include:

• Sep­a­ra­tion of own­er­ship and con­trol
• Pro­tec­tion from ben­e­fi­cia­ry cred­i­tors
• Preser­va­tion of fam­i­ly wealth
• Long-term man­age­ment over­sight

It is impor­tant to rec­og­nize that not all trusts pro­vide the same lev­el of pro­tec­tion.

The effec­tive­ness of any asset pro­tec­tion strat­e­gy depends on:

• Trust struc­ture
• State laws
• Tim­ing of trans­fers
• Trustee author­i­ty
• Ben­e­fi­cia­ry rights

Investors should always seek legal guid­ance when eval­u­at­ing asset pro­tec­tion oppor­tu­ni­ties.

Revo­ca­ble vs. Irrev­o­ca­ble Trusts

One of the most impor­tant deci­sions in DST trust estate plan­ning strat­e­gy involves select­ing the appro­pri­ate trust type.

Revo­ca­ble Trusts

Revo­ca­ble liv­ing trusts are among the most com­mon­ly used estate plan­ning tools.

The grantor typ­i­cal­ly retains con­trol over the assets and can:

• Amend the trust
• Add or remove assets
• Change ben­e­fi­cia­ries
• Revoke the trust entire­ly

Ben­e­fits often include:

• Pro­bate avoid­ance
• Pri­va­cy
• Sim­pli­fied admin­is­tra­tion
• Flex­i­bil­i­ty dur­ing the grantor’s life­time

Many investors choose revo­ca­ble trusts as part of a com­pre­hen­sive estate plan­ning strat­e­gy while main­tain­ing full con­trol over their DST invest­ments.

Irrev­o­ca­ble Trusts

Irrev­o­ca­ble trusts gen­er­al­ly can­not be mod­i­fied once estab­lished with­out spe­cial legal pro­ce­dures.

While they involve giv­ing up some con­trol, they may offer addi­tion­al advan­tages such as:

• Asset pro­tec­tion oppor­tu­ni­ties
• Estate tax plan­ning ben­e­fits
• Wealth preser­va­tion strate­gies
• Long-term fam­i­ly lega­cy plan­ning

Because irrev­o­ca­ble trusts involve sig­nif­i­cant legal and tax con­sid­er­a­tions, pro­fes­sion­al guid­ance is essen­tial before imple­men­ta­tion.

Coor­di­nat­ing With Pro­fes­sion­al Advi­sors

Suc­cess­ful DST trust own­er­ship requires coor­di­na­tion among mul­ti­ple pro­fes­sion­als.

Investors should con­sult with:

Estate Plan­ning Attor­neys

An estate plan­ning attor­ney can deter­mine whether trust own­er­ship aligns with fam­i­ly objec­tives and can draft appro­pri­ate trust doc­u­ments.

Cer­ti­fied Pub­lic Accoun­tants

CPAs play an impor­tant role in eval­u­at­ing:

• Tax impli­ca­tions
• Basis con­sid­er­a­tions
• Trust report­ing require­ments
• Estate tax expo­sure

Finan­cial Advi­sors

Finan­cial advi­sors can assess how DST invest­ments fit with­in the broad­er invest­ment port­fo­lio and over­all wealth trans­fer strat­e­gy.

A col­lab­o­ra­tive approach helps ensure that invest­ment, legal, and tax objec­tives remain aligned.

Con­firm­ing Spon­sor Require­ments

Anoth­er impor­tant con­sid­er­a­tion involves spon­sor eli­gi­bil­i­ty require­ments.

Not every DST spon­sor han­dles trust own­er­ship in exact­ly the same man­ner.

Before invest­ing, investors should con­firm:

• Whether trust own­er­ship is per­mit­ted
• Required trust doc­u­men­ta­tion
• Trustee autho­riza­tion require­ments
• Suc­ces­sor trustee pro­ce­dures
• Ben­e­fi­cia­ry report­ing process­es

Most estab­lished DST spon­sors rou­tine­ly accom­mo­date trust own­er­ship struc­tures, but doc­u­men­ta­tion require­ments may vary from one offer­ing to anoth­er.

Com­plet­ing these reviews ear­ly can pre­vent admin­is­tra­tive delays dur­ing the invest­ment process.

Inte­grat­ing DSTs Into a Com­pre­hen­sive Estate Plan

Trust own­er­ship should nev­er be viewed in iso­la­tion.

Instead, DST inter­ests should be inte­grat­ed into a broad­er estate plan­ning frame­work that may include:

• Wills
• Revo­ca­ble trusts
• Irrev­o­ca­ble trusts
• Pow­ers of attor­ney
• Health­care direc­tives
• Fam­i­ly gift­ing strate­gies
• Ben­e­fi­cia­ry des­ig­na­tions

Peri­od­ic reviews are also essen­tial.

Changes in fam­i­ly cir­cum­stances, tax laws, and invest­ment objec­tives may require updates to trust doc­u­ments and own­er­ship struc­tures.

Investors who review their plans reg­u­lar­ly are often bet­ter posi­tioned to pre­serve wealth and avoid unin­tend­ed con­se­quences.

Long-Term Lega­cy Plan­ning

For many investors, estate plan­ning extends beyond min­i­miz­ing tax­es or avoid­ing pro­bate. It is ulti­mate­ly about cre­at­ing a last­ing lega­cy.

DSTs held in trusts can help fam­i­lies:

• Pre­serve real estate wealth
• Sim­pli­fy inher­i­tance admin­is­tra­tion
• Reduce fam­i­ly con­flicts
• Pro­vide pas­sive income oppor­tu­ni­ties
• Main­tain pro­fes­sion­al asset man­age­ment
• Sup­port mul­ti-gen­er­a­tional wealth objec­tives

By com­bin­ing the ben­e­fits of insti­tu­tion­al-qual­i­ty real estate own­er­ship with care­ful­ly designed trust struc­tures, investors can cre­ate a frame­work that sup­ports future gen­er­a­tions while pre­serv­ing flex­i­bil­i­ty and effi­cien­cy.

Con­clu­sion

Trust own­er­ship and Delaware Statu­tary Trust invest­ments can com­ple­ment one anoth­er excep­tion­al­ly well with­in a com­pre­hen­sive estate plan­ning strat­e­gy. Hold­ing DST inter­ests in a trust can sim­pli­fy ben­e­fi­cia­ry trans­fers, reduce pro­bate com­pli­ca­tions, pre­serve pas­sive income, and poten­tial­ly pro­vide valu­able asset pro­tec­tion oppor­tu­ni­ties depend­ing on the trust struc­ture.

Whether uti­liz­ing a revo­ca­ble trust for pro­bate avoid­ance or an irrev­o­ca­ble trust for advanced wealth preser­va­tion strate­gies, investors should care­ful­ly eval­u­ate how DST trust own­er­ship aligns with their fam­i­ly goals. Through prop­er plan­ning and coor­di­na­tion with qual­i­fied estate attor­neys, CPAs, and finan­cial advi­sors, investors can build a strat­e­gy that pro­tects assets, stream­lines wealth trans­fer, and sup­ports future gen­er­a­tions.

For fam­i­lies seek­ing an effi­cient way to pre­serve real estate wealth while reduc­ing admin­is­tra­tive bur­dens, estate plan­ning with DST trusts may pro­vide a prac­ti­cal and pow­er­ful long-term solu­tion.

Delaware Statu­to­ry Trusts (DSTs) have become a notable part of com­mer­cial real estate invest­ing. As Al DiNi­co­la empha­sizes, a DST is a struc­ture, not an asset class—the focus should remain on the qual­i­ty of the under­ly­ing prop­er­ty and how it fits your goals.  DSTs are for accred­it­ed investors and car­ry risks—illiquidity, real estate mar­ket fluc­tu­a­tions, and spon­sor deci­sions. Con­sult your advis­er for suit­abil­i­ty, espe­cial­ly for §1031 exchanges. For more details, please con­tact:

• Al DiNi­co­la adnicola@fiduciarycm.com  
• Direct: 239 691 8098
• Sched­ule Appoint­ment

Advi­so­ry ser­vices are offered through Fidu­cia­ry CM, an SEC-reg­is­tered advis­er. Invest­ments involve risk and are not guar­an­teed. Always refer to offer­ing doc­u­ments for full risk dis­clo­sures. Delaware Statu­to­ry Trust (DST) invest­ments involve risks asso­ci­at­ed with com­mer­cial real estate own­er­ship and are not suit­able for all investors. These risks may include, but are not lim­it­ed to, loss of prin­ci­pal, illiq­uid­i­ty, ten­ant vacan­cy, financ­ing risk, inter­est rate fluc­tu­a­tions, prop­er­ty val­ue declines, eco­nom­ic and mar­ket con­di­tions, and risks asso­ci­at­ed with spon­sor and prop­er­ty man­age­ment deci­sions. Please refer to the applic­a­ble Prop­er­ty Pri­vate Place­ment Mem­o­ran­dum (PPM) for a com­plete dis­cus­sion of the risks and con­sid­er­a­tions spe­cif­ic to that offer­ing. For addi­tion­al infor­ma­tion regard­ing gen­er­al DST invest­ment risks, please click here. Past per­for­mance is not indica­tive of future results. Nei­ther the Reg­is­tered Rep­re­sen­ta­tive nor the Bro­ker-Deal­er can con­trol or guar­an­tee future deci­sions made by the DST spon­sor, asset man­ag­er, prop­er­ty man­ag­er, ten­ants, lenders, or oth­er third par­ties involved in the oper­a­tion of the prop­er­ty. Past per­for­mance is not indica­tive of future results. Secu­ri­ties may be offered through MSC-BD, LLC, a mem­ber of FINRA/ SIPC.