Delaware Statutory Trusts, Donald Trump & Elon Musk

What you ask do DSTs have in common with two of the nation’s highest profile and most controversial personalities?  Plenty.

Thanks to American sociologist Robert K. Merton’s “law of unintended consequences,” New York State’s Trump fraud ruling and the Delaware Court of Chancery’s ruling invalidating Musk’s performance based compensation package underline the on-going blue state assault on wealth creation in the private sector.

If a former and possible future president along with one of the world’s richest men can be stripped of their wealth via the machinations of ambitious politicians and our black-robed, masters, what can they do to you?  A lot.

Both Mr. Musk and President Trump have been singled out for special, hostile treatment by the coercive power of liberal states.  As Roger Kimball says, “This amounts to a direct attack on the rule of law, which is nonpartisan or it is nothing.”

At it’s most naked, this is an astonishing intervention by progressives to directly harm the CEO of an important company and a leading presidential candidate.

If you thought the flight of business and money from dysfunctional blue states was done, think again.

These actions may reverberate negatively in the c-suites of many companies across the nation.  They may now look for alternative places to bring their corporate business.

The unprecedented legal assault against President Trump is already having negative consequences for New York.  Soon after the verdict Fox News reported that “some nationwide real estate investors, like Cardone Capital’s Grant Cardon, have started telling their terms to pack their bags and leave New York after the verdict in former President Trump’s fraud trial.”

A headline in another outlet put it even more starkly: “Trump Fraud Ruling Could Devastate New York Economy.”  “The ruling,” the story points out, “appears to accelerate a now years-long trend of businesses fleeing the Empire State due to its onerous tax policies, incompetent liberal governance, and now outright hostility toward conservatives and the business community in general.”

Sound familiar?  This can describe any number of blue states, including but not limited to Oregon, Washington, California, Colorado, Illinois, etc.  The Trump verdict is merely the most dramatic and high profile in a long line of anti-business, “progressive” legal assaults on private property.

Progressives view the private sector as an unending source of ‘rents’ they can avail themselves of at any time and in any amount.  Therefore, it may behoove CRE investors to “get when the getting is good.”

We have been beating this drum for several years.  Sadly, the circumstances of its creation are getting worse not better.  The aforementioned events and individuals singled out for punishment cannot emphasize this more dramatically.

Fortunately, CRE investors have the mechanism of 1031 exchange to facilitate their escape while seeking to mitigate potential negative tax consequences.

Heretofore, 1031 exchange was merely a convenience for income property owners, allowing them to defer capital gains at those infrequent intervals when a property was sold.

With Delaware statutory trusts, it has the potential to be much more:  safe passage to a red state where taxes are lower, the regulatory burden less, and the confiscatory power of the state virtually non-existent.

With decades of CRE acquisition, management, and disposition experience, DST property sponsors are ready to transit you away from this progressive hell.  It may be time to start considering your options.

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