Under a bipartisan bill sponsored by Elizabeth Warren (D-MA) and Steve Daines (R-MT), congressional members and their spouses would not only be banned from trading stocks, but also be required sell their individual stock holdings and put their other assets in blind trusts.
When you own a high-value, highly appreciated asset, such as a business, a commercial real estate investment, your personal residence, or even an art or antique collection, you may well be hesitant to sell it, even though you’d prefer to do exactly that. Why the hesitancy? Capital gains taxes could eat up 20% or more of your profit. In addition, the sale could push you into the 37% income bracket. With draconian results like these, it’s no wonder you’re just sitting on the asset. What you need is a viable exit strategy that lets you “exit rich.”
Deferred Sales Trusts are valued by many investors and regular people selling investment properties because they represent an opportunity to defer taxes. Deferring taxes from selling a highly appreciated asset provides the investor or seller with an opportunity to invest the proceeds from the sale of the asset. However, some sellers comment that the legal fee associated with setting up a deferred sales trust is too high to make the benefits of such a trust worthwhile. But is this logic sound? To find out, let’s dive into a case study that illustrates how the cost of choosing not to implement a deferred sales trust is actually higher (both upfront and in the long run) than paying the legal fee required to set up such a trust.
Josh Curtis, CEO of EQB speaks with Greg Reese, CEO of Reef Point and DST Trustee on the Deferred Sales Trust. A lesser known but powerful modern strategy for deferring capital gains taxes, the Deferred Sales Trust (DST), employs an innovative tax strategy to defer capital gains tax and preserve wealth.
One of the main reasons that investors — even savvy ones — give for failing to avail themselves of the many benefits the Deferred Sales Trust (DST) offers when selling a highly appreciated asset is that they fear the up-front legal fee they will pay to establish their own DST is too substantial to be worth it. However, is this really true? Let’s use the following case study to show how paying the DST legal fee compares to paying the costs inherent in foregoing its unique benefits.