DST interests need four documents when the holder dies

Internal Revenue Code Section 1014 steps up the basis of a Delaware statutory trust interest to date-of-death value when the holder dies. Heirs need four documents to complete the handoff, according to a WealthManagement.com guide published Oct. 28.

The documents are the trust agreement and private placement memorandum, the subscription agreement and sponsor confirmation, the Section 1031 closing file with the qualified intermediary's records, and every annual operating statement since. The sponsor confirmation shows how much the client bought and in whose name.

The subscription agreement states the titling, so advisors can check whether a surviving spouse's interest passes outside probate. An interest in the client's own name goes through probate; a revocable living trust skips it; a single-member LLC passes with the entity; and joint ownership with a spouse passes by survivorship.