“At Fortitude, we see it constantly: a parent gifts a building to their kids to make life simpler, and instead hands them a tax bill that forces a sale. The most powerful estate-planning tool in real estate isn’t a gift — it’s patience, structure, and the step-up in basis.”
— Daniel Raupp, Founder & Managing Partner, Fortitude Investment Group LLC
(And Why the Step-Up in Basis May Be the Most Powerful Wealth-Preservation Tool Available)
As real estate investors age, one of the most common—and well-intentioned—questions we hear at www.1031DST.com is:
“Should I put my real estate into my children’s names now to make things easier later?”
While the motivation is understandable, from a 1031 exchange, tax, and estate-planning standpoint, gifting or retitling real estate during life is often one of the most costly mistakes elderly investors make.
In many cases, a far superior strategy is to retain ownership, plan through trusts, and transition into passive investments such as Delaware Statutory Trusts (DSTs)—allowing heirs to receive assets with a step-up in basis at death, potentially eliminating decades of capital-gains tax.
When real estate is gifted during life, beneficiaries inherit the original cost basis, not the property’s current market value. At www.1031DST.com, we routinely see families shocked by the tax consequences this creates.
This often results in:
When property passes at death:
This is one of the core planning principles emphasized at www.1031DST.com.
Investor Profile
Decision Made
The investor gifted a multifamily property to two children to “simplify inheritance.”
Outcome
Lesson
Avoiding probate cost the family seven figures. At www.1031DST.com, this is one of the most common and preventable mistakes we see.
Investor Profile
Strategy Used
Result
Key Takeaway
This is exactly the type of long-term planning discussed daily at www.1031DST.com—patience and structure can save generations of wealth.
Investor Profile
Alternative to Gifting
Rather than gifting properties to children:
Outcome
This approach—frequently implemented through www.1031DST.com—allows aging investors to retire from being landlords without triggering unnecessary taxes.
Investor Profile
What Happened
Better Alternative
Retaining ownership in a trust and using passive DST investments—an approach outlined at www.1031DST.com—would have preserved control, income, and asset protection.
At www.1031DST.com, trust-based planning is central to responsible wealth transfer.
Proper trusts can:
Crucially, you do not need to give up ownership to plan effectively.
For elderly investors, Delaware Statutory Trusts provide:
DSTs—featured prominently at www.1031DST.com—allow investors to simplify life today while protecting their heirs tomorrow.
For aging real estate investors:
Gifting or retitling during life often:
Retaining ownership, planning through trusts, and using 1031 exchanges and DSTs:
Once real estate is gifted, the tax consequences are usually irreversible.
If you or your family are considering:
Education is critical. Resources and guidance are available at www.1031DST.com to help investors understand their options before making permanent decisions.
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal.
DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million exclusive of primary residence, and/or possessing an annual income of over $200,000, or $300,000 with a spouse and expects the same or greater for the current year) and accredited entities. Please check with a qualified CPA or attorney to determine if you are accredited. Past performance is no guarantee of future results. Diversification does not guarantee returns and does not protect against loss. Potential cash flow, potential returns and potential appreciation are not guaranteed.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA). Fortitude Investment Group is independent of CIS, CAM, and CIA.