Advisors should read each DST ownership line against the estate plan

When a client who holds a Delaware statutory trust interest dies, the estate needs four documents and a titling decision made years earlier: how the subscription agreement was titled.

The subscription agreement, rather than the trust instrument alone, decides whether a spouse's share avoids probate. A DST interest can reach an advisory book through a 1031 exchange, so paperwork signed at subscription can still control at death.

Advisors should pull the subscription agreement for every DST position and read the ownership line against the client's current estate plan. For a married client who intends a spouse's share to pass outside probate, that line decides the outcome, and a mismatch found now can still be corrected by signature.

Heirs take the interest at its date-of-death value, a figure struck on the day the holder dies. That value sets the step-up, so the date of death should sit on the checklist alongside the documents.

While the client is alive, four questions are worth putting to the sponsor and estate counsel. Ask how the ownership line reads, whether a spouse appears on it, when the estate documents were last revised, and what the sponsor requires before it records a transfer at death.

Consider a married holder of a DST interest acquired in a 1031 exchange whose estate plan directs the spouse's share outside probate. If the subscription agreement names the spouse on the ownership line, the share moves as the plan intends. If it names the holder alone, the share follows the titling and the estate process that titling implies.