As a business broker, one of the most important services you provide to your clients when they want to sell their business is to help them establish a fair market price for it and then find a buyer willing to pay that price. Often, however, that’s just the tip of the iceberg.
Whatever reason your clients have for wanting to sell, they, of course, want to get the highest price possible. Conversely, the one thing they definitely do not want is for a large percentage of their sale proceeds to be eaten up in long-term capital gains taxes.
What if you could provide your clients with a legal, tested and proven way to defer their capital gains taxes almost indefinitely while also enjoying virtually unlimited reinvestment opportunities and receiving the income they desire?
You can. It’s called the Deferred Sales Trust (DST), and becoming a Reef Point Partner allows you to offer this unique, proprietary installment sale strategy to your clients.
Deferred Sales Trust vs. Delaware Statutory Trust
Do not confuse the Deferred Sales Trust with a Delaware Statutory Trust, which some also refer to as a DST. They are completely different.
In a nutshell, a Delaware Statutory Trust is an investment vehicle that allows individual investors to passively own real estate. The Deferred Sales Trust, on the other hand, is the proprietary form of the installment sale method authorized by Section 453 of the Internal Revenue Code.
For a fuller discussion on the differences between the Deferred Sales Trust and a Delaware Statutory Trust, click here.
How the Deferred Sales Trust Works
Only the Estate Planning Team and its affiliates can offer the Deferred Sales Trust. Reef Point is one of these affiliates. In addition, Greg Reese, our Principal and Managing Member, is one of only 13 trained, vetted and approved Independent DST Trustees in the country.
When you become a Reef Point Partner, you bring your client to the Estate Planning Team to discuss his or her upcoming sale, overall investment goals and objectives, risk tolerance and desired income. The Team’s tax attorney then draft’s your client’s personalized, customized DST.
Your client sells his or her business to the DST in exchange for a secured installment sale contract, i.e., promissory note, that sets forth the amount and times at which he or she will receive payments. The Independent DST Trustee then sells the property to its ultimate buyer and accepts the proceeds into the Trust. Your client pays no capital gains taxes since the DST owned the business at the point of its ultimate sale.
The Trustee begins investing the sale proceeds in accordance with your client’s wishes, and paying him or her according to the terms of the installment sale contract. Your client pays no capital gains taxes unless and until one of more of these payments contains Trust principal as well as income.
Additional Partnership Benefits
Not only does partnership with Reef Point allow you to offer the DST to your clients, but also benefits you in the following ways:
- Maximization of opportunities with your existing clients and prospects
- Full Reef Point support, such as DST training and customized marketing materials
- A competitive edge over other business consultants
- Ability to take in more clients and close more transactions, with a consequent increase in your brokerage’s profitability
- Opportunity to develop new and deeper relationships with your other professional partners
How to Get Started
If a Reef Point Partnership sounds like just what you’ve been looking for to add value to the services you already provide and thereby attract new clients, we’d love to talk with you. Simply contact us. We’ll be happy to answer all your questions and start you on your way to greater profitability.
META: In today’s business climate, you need an edge over your competitors in order to enhance your bottom line. If you’re a business broker, becoming a Reef Point Partner can give you exactly that. Such a partnership allows you to offer your clients the Deferred Sales Trust as a capital gains tax-saving strategy when they sell a highly appreciated business.