Canonical page: https://sequoia-research.com/writing/delaware-statutory-trust-pros-and-cons-liquidity-commitment-planner
Author: Sequoia Research
Published: 2026-10-17T00:58:39.837Z
Updated: 2026-10-17T00:58:39.837Z
Interactive tool: https://sequoia-research.com/writing/delaware-statutory-trust-pros-and-cons-liquidity-commitment-planner#research-tool

# Delaware Statutory Trust Pros and Cons: Liquidity Commitment Planner

## What Is This Article About?

This guide explains a planner that maps investment commitments and spending against cash you can access. It compares a case with no investment exits during the period with two cases using your own expected and delayed exit months. The monthly schedule highlights both funding gaps and dips below your chosen cash reserve. The tool helps examine the Delaware statutory trust pros and cons without assuming a DST can be sold on demand.

## Table of Contents

- [What the Liquidity Planner Shows](#what-the-liquidity-planner-shows)
- [Enter Accessible Cash and a Reserve Floor](#enter-accessible-cash-and-a-reserve-floor)
- [Add Planned Investments and Extra Expenses](#add-planned-investments-and-extra-expenses)
- [Understand the Monthly Cash Order](#understand-the-monthly-cash-order)
- [Compare the Three Exit Cases](#compare-the-three-exit-cases)
- [Read the Funding-Gap Results](#read-the-funding-gap-results)
- [Follow the Worked Example](#follow-the-worked-example)
- [Test a Payment Stop and Other Changes](#test-a-payment-stop-and-other-changes)
- [Use the Results in a Real Planning Discussion](#use-the-results-in-a-real-planning-discussion)
- [Privacy, Exports, and Calculation Limits](#privacy-exports-and-calculation-limits)
- [Frequently Asked Questions](#frequently-asked-questions)

## What the Liquidity Planner Shows

The planner asks whether your accessible cash can support the commitments you enter over a stated period. It is designed for planned investments funded from that cash. It does not calculate whether an investment is suitable or assign a score to a DST, sponsor, or broker.

Each plan can include up to eight investments and twelve extra expenses. You choose a period from one to 120 months. The tool tracks cash month by month and shows when the balance would fall below zero or below a reserve floor you choose.

The key comparison is the case with no exit during the period. Private investments can be hard to sell, and the SEC warns that investors may need to hold private securities indefinitely. An expected sale date is therefore an assumption to test, not an available bank balance. [SEC private-placement bulletin, updated September 21, 2026](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/private-placements-under-regulation-d-updated-investor-bulletin)

The two other cases help show how timing affects the plan if the entered exits occur. They do not estimate the chance of a sale. None of the three is labeled the likely or worst outcome. A useful result is a clear funding question tied to a particular month.

## Enter Accessible Cash and a Reserve Floor

Opening accessible cash is the money available at the start of month one. Include the cash you want to protect as a reserve. Do not include a DST's estimated value, an unapproved loan, or sale proceeds that have not arrived. The tool will add modeled exit proceeds only in the cases that call for them.

The reserve floor is a threshold within that opening cash. It is not a second account or an extra deduction. If opening cash is $60,000 and the floor is $10,000, the model starts with $60,000. It flags a shortfall when the accessible balance falls below $10,000.

There is no required reserve amount built into the tool. Choose the figure through your own planning process. A larger floor leaves less room for commitments and expenses before a warning appears. That is a result of your chosen constraint, not a judgment about the investment.

Enter monthly other income after taxes already deducted from that income. Enter monthly spending with any tax payments that have not been accounted for elsewhere. Avoid counting an expense both in spending and in a net income figure.

The monthly amounts remain fixed through the period. If your income or spending changes sharply at a known date, this version cannot model that changing monthly series directly. Use separate shorter plans or a more detailed budget, and preserve that limit when discussing the output.

## Add Planned Investments and Extra Expenses

For each investment, enter a name, the month cash is committed, and the commitment amount. The commitment leaves accessible cash at the start of that month. It must be greater than zero. Remove unused rows rather than treating a zero commitment as an existing investment with free exit proceeds.

Enter the monthly net cash you assume the investment will pay after investment costs and your assumed personal taxes. Payments begin in the month after the commitment. That is a model convention, not a statement about how real DSTs start payments. If the first real payment differs, this simple planner may not match its schedule closely enough.

Next, enter an expected exit month, a delayed exit month, and net exit cash. The expected exit must be at least one month after commitment. The delayed month must be the same or later. Exit months can run through month 360, even when the planning period ends sooner. An exit beyond the period contributes no proceeds within that case.

Net exit cash should already reflect the debt, sale costs, other charges, and taxes you intend to include. The tool does not compute them. The SEC's fee guidance explains why product charges and fees for professional services deserve separate review. Identify which charges are already included before entering a net figure. [SEC fee bulletin, July 23, 2025](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated)

An extra expense is a one-time bill in addition to regular monthly spending. Give it a name, month, and amount. Several extra expenses can occur in the same month. Their amounts are added together, so check that they are separate bills rather than duplicate entries for the same project.

## Understand the Monthly Cash Order

The planner uses one clear order within each month. It starts with the prior month's ending cash. It then deducts investment commitments, extra expenses, and regular spending. Only after those deductions does it add other income, investment cash payments, and any modeled exit proceeds.

This creates a balance before receipts and a balance at month end. The balance before receipts is important because an annual total or month-end total can hide a short gap. Under this convention, money arriving at the end of a month cannot pay a bill due at the start without another source.

For example, suppose a month starts with no cash. A $500 bill is due at the start, and $1,000 arrives at the end. The ending balance is $500, but the model flags a $500 funding gap before the receipt. It does not assume the household borrowed the money for free.

This ordering is deliberately explicit. It may differ from your real dates. If most income arrives before spending, the model may show a timing need that your actual calendar avoids. Check those dates before taking action. The output is a monthly planning aid, not a daily bank forecast.

Investment cash begins the month after commitment and includes the modeled exit month. It stops after the exit in the expected and delayed cases. No interest or return is earned on cash left in the planner. Those rules keep the timing comparison understandable but limit how closely it can match a real portfolio.

## Compare the Three Exit Cases

The no-exit case deducts every planned commitment but adds no exit proceeds during the period. It still includes your assumed monthly investment payments after each commitment. It is not a payment-stop case unless you enter zero for those payments.

The expected-exit case adds each investment's net exit cash at the end of its expected exit month. Payments from that investment stop after that month. Other investments continue under their own entered schedules.

The delayed-exit case works the same way but uses the delayed months. It uses the same net exit cash amounts as the expected case. This isolates the timing difference. It does not assume a delay has no effect on real value; it simply leaves that change for you to test separately.

A delayed case can show more ending cash because it receives additional monthly payments before sale. That does not make delay preferable. Capital was unavailable for longer, values may change, and the tool does not calculate an annual return or the value of other opportunities.

If an exit is beyond the planning period, that investment continues paying its assumed monthly amount through the horizon and contributes no exit proceeds. The result can therefore match the no-exit case for that investment. This is expected behavior, not a missing calculation.

## Read the Funding-Gap Results

The summary shows cash at the end, the lowest accessible balance, the first funding-gap month, and the first month below the reserve floor. Month zero means the opening balance itself was already below the chosen floor. It does not represent an earlier spending period.

A funding gap appears when the balance before receipts is negative. The negative value represents money the plan still needs. The tool carries that gap forward so later rows remain connected, but it does not create a loan or charge borrowing costs. A real solution would require a funded change to the plan.

The reserve test is separate. A balance of $8,000 may cover current bills while falling $2,000 below a $10,000 floor. That is a reserve shortfall, not a negative bank balance. Keeping the two labels separate helps identify which problem you are trying to solve.

The monthly details also show extra opening cash needed to avoid any negative balance. The summary shows extra opening cash needed to keep the chosen reserve throughout the period. These amounts come from the lowest modeled balance. They are separate tests; do not add them together.

For example, a lowest balance of negative $2,000 and a $10,000 reserve floor imply $2,000 more opening cash to avoid a negative balance, or $12,000 to keep the full reserve. The second amount already includes the first. Neither figure is a recommended emergency fund.

## Follow the Worked Example

The prefilled example is hypothetical. It starts with $60,000 of accessible cash and a $10,000 reserve floor. Other monthly income is $4,000, and monthly spending is $4,500. The period is 36 months.

A $30,000 investment is committed in month one. It pays an assumed $200 a month from month two onward. The entered expected exit is month 24; the delayed exit is month 36. Both use $32,000 of net exit cash. A separate $10,000 home project is paid in month 18.

In the no-exit case, there are 35 investment payments, totaling $7,000. Other income totals $144,000, while regular spending totals $162,000. Starting cash of $60,000, less the $30,000 commitment and $10,000 project, plus the income and payments, leaves $9,000 at the end.

The lowest balance is $4,800 before month 36 receipts. The plan first falls below the $10,000 reserve in month 19, when its balance before receipts is $9,900. It never becomes negative under these inputs. Another $5,200 of opening cash would keep the chosen reserve throughout this case.

In the expected-exit case, the investment pays $200 in months two through 24. Those 23 payments total $4,600. Adding the $32,000 exit produces $38,600 of ending accessible cash. The lowest balance is $8,400 before the month 24 receipts, so an extra $1,600 at the start would keep the reserve floor.

In the delayed case, all 35 payments occur, and the $32,000 exit arrives at the end of month 36. Ending cash is $41,000. The lowest balance remains $4,800 before that final month's receipts. The late exit does not remove the earlier need to cover spending.

| Example result | No exit | Expected exit | Delayed exit |
| --- | ---: | ---: | ---: |
| Ending accessible cash | $9,000 | $38,600 | $41,000 |
| Lowest accessible balance | $4,800 | $8,400 | $4,800 |
| First month below reserve | 19 | 19 | 19 |
| Extra opening cash to keep reserve | $5,200 | $1,600 | $5,200 |

The extra $2,400 at the end of the delayed case comes from twelve more assumed $200 payments. It is not a calculated gain in property value or proof that waiting produces a better return.

## Test a Payment Stop and Other Changes

Set monthly investment cash to zero and rebuild to test a full payment stop under this model. In the example's no-exit case, ending cash falls from $9,000 to $2,000. The lowest balance becomes negative $2,000 before month 36 receipts. The first funding gap occurs in month 33.

Next, test changes one at a time so you can explain their effects. Move a commitment later, reduce its size, add a known bill, or lower exit proceeds. Then combine changes that could reasonably matter together. Label each scenario as an assumption, not a forecast.

Several planned investments may still share the same risks or exit window. FINRA's concentration guidance includes similar assets and holdings that are difficult to sell. The planner cannot measure those relationships, but it can show what happens when the same delay months are entered across several holdings. [FINRA concentration-risk guidance, June 15, 2022](https://www.finra.org/investors/insights/concentration-risk)

A longer horizon can also expose a gap that falls just beyond the original ending month. Extend the period and check whether the same income and spending assumptions still make sense. An extra year of flat inputs is an arithmetic scenario; it is not evidence that actual costs will remain flat.

## Use the Results in a Real Planning Discussion

Bring the assumptions and their sources with the output. A planner filled with unsupported proceeds is not improved by a neat table. Identify which figures come from current records, which are professional estimates, and which remain unknown.

Tax cash needs a separate review. IRS Publication 505 explains that federal tax is generally paid during the year through withholding or estimated payments, as applicable. The planner neither calculates that tax nor establishes that a zero tax assumption is valid. Use figures appropriate to your own situation and avoid deducting them twice. [IRS Publication 505, 2026 edition](https://www.irs.gov/publications/p505)

Keep restricted exchange funds separate from money freely available for household spending. This planner does not determine section 1031 qualification or which funds you may use. If a planned commitment is part of an exchange, ask the professionals handling it to confirm the funding route before treating those dollars as available here.

The useful discussion starts with a month and an amount: “The plan needs another $5,200 before this date to keep our chosen reserve.” That is more specific than asking whether the investment is generally liquid. The answer may involve a smaller commitment, different spending, or another verified resource.

## Privacy, Exports, and Calculation Limits

The prototype runs in the browser. It does not fetch account data, contact a sponsor, or store entries between visits. Names and notes appear as plain text. Avoid entering account numbers or other sensitive details that the planning task does not need.

A successful calculation enables a JSON download of the current inputs, conventions, and all monthly results. Cash fields in that file are integer US cents; the on-screen tables display US dollars. The export is a record, not an import file for this tool. Save it securely if you want to retain the work.

Changing an input or adding or removing a row clears the old result and disables download until you rebuild. That helps prevent a result from being mistaken for a calculation of newer inputs. Downloads remain subject to the browser's normal controls.

Each money input must be nonnegative, have at most two decimal places, and be no more than $10 billion. The calculation uses exact integer cents. It models no inflation, cash interest, loan interest, changing tax rules, daily dates, variable payment series, or investment return. The limits should remain beside any exported result you share.

## Frequently Asked Questions

### Does the no-exit case assume distributions stop?

No. It includes the entered monthly investment cash from the month after commitment through the planning period. Enter zero and rebuild to test a stop. A no-sale case and a no-payment case answer different questions.

### Why can a plan have a funding gap and positive ending cash?

The tool pays expenses at month start and receives income at month end. Later cash cannot erase the earlier funding need. Review your actual dates to see whether this convention matches the bills and receipts you expect.

### Should I subtract the reserve before entering opening cash?

No. Opening cash includes the reserve amount. The floor is a threshold used to flag dips. Subtracting it first and entering it again as a floor would count the same restriction twice.

### Can I use this for a DST I already own?

This version models new positive cash commitments during the chosen period. It does not include an opening portfolio of existing interests. Use a different schedule for existing holdings rather than inventing a new commitment or treating their value as accessible cash.

### Does a nonnegative balance mean the investment is suitable?

The tool does not use a suitability score or approve an investment. A nonnegative result only means the entered cash assumptions fund the entered expenses under the model's timing rules. The assumptions and the investment still need review.

### What happens if an exit falls after the planning period?

No exit proceeds are added within that case. The entered monthly investment payments continue through the horizon. Extend the period or change the assumptions if you want to examine later months.

## About Sequoia Research

Sequoia Research, LLC provides independent research on DSTs and other real estate investment offerings. This educational tool helps readers make cash assumptions visible and prepare focused questions for their advisers.

## Sources

- [SEC private-placement bulletin](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/private-placements-under-regulation-d-updated-investor-bulletin), originally August 17, 2022; updated September 21, 2026.
- [SEC fee bulletin](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated), July 23, 2025.
- [FINRA concentration-risk guidance](https://www.finra.org/investors/insights/concentration-risk), June 15, 2022.
- [IRS Publication 505](https://www.irs.gov/publications/p505), 2026 edition.

Sources accessed October 16, 2026. Tool behavior and examples are original planning illustrations, not official calculations or current offering terms.


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