For business owners and investors looking to sell significant assets while managing tax implications, the Deferred Sales Trust (DST) offers a powerful solution. This innovative strategy enables sellers of businesses, real estate, cryptocurrency, or high-value collectibles to defer capital gains taxes while maintaining flexibility in wealth distribution.
Key Benefits Overview
The primary advantage of a DST is its ability to postpone capital gains tax obligations through a legally compliant structure recognized by the IRS. Sellers can customize payment schedules to match their financial needs while ensuring full regulatory compliance.
Qualifying assets include:
- Businesses
- Real estate holdings
- Valuable collectibles
- Cryptocurrency investments
The DST must be established before finalizing any sales agreement.
Legal Setup
Specialized DST tax attorneys create a carefully structured trust. They coordinate with all parties involved to ensure proper documentation and compliance throughout the process.
Transaction Structure
- Asset Transfer: The seller transfers their asset to the trust just before closing.
- Buyer Purchase: The buyer then purchases the asset from the trust, with proceeds flowing directly into the trust structure.
- Tax Deferral Foundation: This arrangement establishes the foundation for tax deferral while allowing the seller to maintain flexibility in how funds are distributed.
Installment Contract
Rather than receiving an immediate lump sum, the seller obtains an installment sales contract from the trust. This contract provides:
- Flexible payment terms
- Interest payments based on the pre-tax sales proceeds
- Flexibility with the timing and structure of payments
Post-Sale Management
Once the sale is complete, the trustee manages the funds in accordance with predetermined guidelines. They work closely with the seller, who becomes the creditor, to develop an investment strategy and oversee regular payment distributions that align with financial goals.
Investment Planning
Professional investment advisors collaborate with the seller to create a diversified portfolio tailored to their long-term objectives. This may include:
- Various asset classes
- Investment vehicles balancing growth and security
- Tax-efficient strategies to maximize wealth preservation
The Deferred Sales Trust is a sophisticated approach to asset sales, offering significant tax advantages through proper structuring. For those considering large asset sales, consulting with DST specialists ensures proper execution of this powerful strategy.
Get Started Today
Contact our team at Reef Point LLC to learn how a DST can benefit your specific situation. Our experts are here to guide you through the process and help you maximize your financial future.