Delaware Law Office
of Larry D. Sullivan, Esquire


Delaware Business Trusts

Benefits of Delaware Statutory Business Trusts

There are many benefits to using a Delaware Business Trust to hold assets over other legal forms, and if you are considering using a Business Trust created under Delaware's statutory trust laws, we would like to explore that option with you.

Delaware business trusts (DBT) can provide benefits in the reduction of gift, estate, and other taxes and in the protection of asset and owners. The DBT is an unincorporated business association used to hold assets for the benefit of the trust owners.

Flexibility and Statutory Stability

Delaware business trusts are preferred by many for structured financing, regardless of whether a business is financially healthy, restructuring or going through a reorganization. This is in part because the DBT offers flexibility and statutory features designed to reduce risk.

Just as a stockholder of a private corporation enjoys a shield from the liabilities of the corporation, Delaware Business Trusts provide a similar shield, for the benefit of the ultimate beneficiaries. This is because the Trust is a separate legal entity and may conduct any lawful business or activity.

Delaware Benefits

Delaware is a recognized leader when it comes to corporate and business law, with a reknown Court of Chancery hearing business matters, a tight and nonpolitical relationship between the Delaware Bar and the Delaware Legislature to keep business law current, a stable and respected body of business law, and no income tax on passive income from Trusts.

Compared to common law

Trusts aren't new, and common law trusts are still in use by many, and an option to be considered, on a case by case basis. They've been used for centuries to preserve and protect property for the wealthy and to conduct business where a flexible entity was desirable. However, There's a benefit to trust created under the Delaware Business Trust Act, which unlike common law relating to trusts, is current and creates certainty in modern commercial transactions.

Easy and inexpensive to create

A Delaware Business Trust can be established with relatively little effort and expense, and the trust income is not subject to Delaware state income tax. Additionally, Delaware Business Trusts provide a level of ownership privacy that is appealing to many taxpayers.

Our Trust Department

There is no "fill in the blank" form to create the Trust Agreement, however. Careful planning with an attorney and an accountant are key to the success when it comes to trusts.

Our law office works with a wide range of clients, including:

  • Bank Trust Officers
  • Investment Bankers
  • Drafting Attorneys
  • Bond Counsel
  • Funds Administrators
  • Corporate Trust Professionals
  • Transactional Attorneys
  • Underwriters

We offer:

  1. Streamlined processing of Business Trusts,
  2. Knowledge and expertise in trust management,
  3. Prompt and individualized service,
  4. Experience in working with clients from around the globe.

Uses for a Delaware Trust

A DBT may carry on any lawful business or activity, whether or not conducted for profit, including holding title property in an active or custodial capacity. The principal advantage of the DBT Act is flexibility. The Act enables individuals to create a structure with greater flexibility, and to create management structure by contract.

Some of the types of businesses that can benefit from a Delaware Business Trust include:

  • Credit Card Companies
  • Car Dealerships
  • Mortgage Companies
  • Movie Theatre Chains
  • Pharmaceutical Companies
  • Many others

The kinds of assets that can be held in trust are things like licensing fees from patents and other intellectual property, land owned by a trust and leased to businesses, money from the sale of negotiable documents, and many others.

The DBT Act was hatched in the business savvy environment of Delaware's other state-of-the-art business legislation, such as the laws governing corporations, limited partnerships and limited liability companies. The administrative advantages of a DBT distinguish it from some forms of business entities, while it is likened to others.

A DBT need only file a simple certificate of trust with the Delaware Secretary of State in order to take advantage of the Act. Very much like LLCs, there is not a requirement to file the contractual instrument of a DBT. Therefore, the nature of the business as well as the identities of the beneficial owners of a DBT are not necessarily a matter of public record.

Delaware's Court of Chancery has jurisdiction over a DBT, and any contested matters relating to the internal affairs of a DBT, the rights and responsibilities of its trustees and beneficial owners, and the interpretation of its contractual instrument.

To talk with us about Delaware Business Trusts, contact our office by phone at (1) 302 286-6336, or send us an email at info@delawoffice.com.

We are located at 111 Barksdale Professional Center, Newark, Delaware 19711-3258, and our normal business hours are 9:00 am to 5:00 pm EST.