In the Delaware Statutory Trust (DST) industry, a Successor Trustee is an individual or entity appointed to step in and assume the responsibilities and duties of the original or current trustee should they become unable or unwilling to continue serving in that role. The specifics about the roles, powers, and responsibilities of the Successor Trustee are typically laid out in the trust agreement.
A Delaware Statutory Trust is a distinct legal entity created as a trust under Delaware law. It can be used for a variety of purposes, including real estate investment and securitization. In the realm of real estate, for instance, DSTs have become popular tools for pooling investors’ capital to invest in income-producing properties. When a DST is used for investment purposes, a trustee is appointed to manage the trust’s affairs, including handling the property or properties owned by the DST.
In order to ensure continuity in the management of the trust’s assets, especially in scenarios where the currently appointed trustee cannot continue their role (due to death, incapacity, resignation, or other reasons), a Successor Trustee is typically named in advance in the trust agreement. This provision ensures that there is always a trustee in place to manage the trust’s affairs and protect the interests of the beneficiaries.
In the DST, the Successor Trustee, once taking over, will assume all the duties and powers of the original trustee, acting in the best interest of the investors or beneficiaries of the trust.