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Choosing Your Business Entity
Delaware Statutory Trust
What Is It?
A Delaware statutory trust is an unincorporated association which is created by a governing instrument ("trust agreement") under which either (a) property is held, managed, administered, invested and/or operated, or (b) business or professional activities for profit are carried on by a trustee or trustees for the benefit of a person who is entitled to a beneficial interest in the trust property. A Delaware statutory trust has a separate legal existence and can conduct business in its own name.
Management:
A Delaware statutory trust is managed by, or under the direction of, its trustees unless the trust agreement provides otherwise. Management of a trust may be delegated by the trustee(s) or may be vested directly in an agent of the trustee.
Formation Requirements:
A Delaware statutory trust created by a trust agreement is formed upon the filing of its certificate of trust. A certificate of trust must be signed by all of the trustees. A Delaware statutory trust that is, or will become, a registered investment company must maintain a registered agent and registered office within the state. Delaware Corporate Services Inc. ("DCS") can act as your registered agent in Delaware and can also provide you with a registered office in Delaware. Otherwise, a statutory trust must have at least one trustee who resides in, or has its principal place of business in, Delaware. There are many Delaware financial institutions that provide this service. If you require the services of a Delaware trustee, please contact us.
Liability Issues:
An owner of a beneficial interest in a Delaware statutory trust is generally entitled to the same limitation of personal liability afforded to stockholders of Delaware private corporations for profit. Similarly, a trustee is generally not personally liable to any person other than the Delaware statutory trust or its beneficial owners for any act, omission or obligation of the statutory trust or any trustee thereof.
Tax Considerations:
Similar to the LLC and Limited Partnership, a Delaware statutory trust can be structured to qualify for "pass through" tax treatment for state and federal income tax purposes and, therefore, avoid income tax at the entity level. At this time, the State of Delaware does not impose an annual tax or franchise tax upon a Delaware statutory trust.
The Statutory Trust Order Form:
Upon receipt by us of the completed form, we will prepare and return to you a Certificate of Trust for execution by each Trustee of the Trust. Upon the return to us of the fully executed Certificate, we will form the Trust by filing such Certificate with the appropriate state agency. Please call our offices at (302) 482-4262 or email us for assistance.
The information contained on this web site is for general information purposes only, is not intended as legal advice and may not apply to your particular situation. If you require legal advice regarding a Delaware entity, we will be happy to refer you to an attorney familiar with Delaware law.
We recommend that you consult your attorney or accountant if you have specific goals or hope to achieve specific tax results.
To facilitate the formation of a Statutory Trust, please fill out and return to us the Statutory Trust Order Form with a copy of the Certificate of Trust, signed by all of the trustees. Please call our offices at (302) 482-4262 or email us for assistance.
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