The Core Team of Professionals That Create and Manage DSTs

There is rarely a single person behind any wealth management strategy, and a Deferred Sales Trust is no different.

A DST has two beneficial uses: First, it allows you to structure an asset sale to defer the capital gains tax payments indefinitely. Second, it provides a vehicle for you to invest the full proceeds to best suit your financial and lifestyle objectives.

Naturally, the execution of these processes is not without some risk. With Reef Point and the Estate Planning Team, you will work with a core team of professionals proficient in creating and maintaining DSTs. Their primary goals are to carry out the complex legal procedures involved with managing your DST and advise you on the best ways to meet your target earnings and distributions from your asset sale.

Meet the Estate Planning Team

The Deferred Sales Trust is a plan for deferring capital gains taxes created and managed exclusively by the Estate Planning Team organization. Members of the EPT are asset management and tax law professionals who have been vetted, approved, and trained in their specific area of expertise pertaining to the DST strategy. Although each individual DST is composed of many moving parts unique to the seller, they all boil down into three fundamental steps:

  1. Create the legal framework for the trust
  2. Determine the payback terms of the installment note
  3. Manage the funds with an investment strategy

Three EPT core professionals manage these steps; a DST Trustee, a tax attorney, and an investment advisor.

Certified DST Trustee

Trustees, or trust administrators, are the legal owners of the assets in a trust, which is the key principle that allows you to shed liability for paying capital gains taxes on those assets. The EPT hand-picks and certifies each DST Trustee, and one will act as the primary trustee of your trust.

Your trustee will initially work with you to develop a financial plan and establish your installment note payback term and amortization schedule, utilizing the ideal combination of principal and interest payments. He or she will also organize your annual paperwork and 1099 tax filing for your CPA.

DSTs are unique because you can modify the term or structure of the installment note at any point after creating the trust. During periodic reviews of your trust’s performance, your trustee can help you adapt the structure to incorporate changes in the financial market, your lifestyle, and goals, or emergencies.

DST Tax Attorney

The DST tax attorney creates the fine print that will ensure the trust agreement meets all of your needs and will hold up to legal and regulatory scrutiny. Your EPT tax attorney will also synchronize the sale elements with all of the third-parties involved, including:

  • Purchasing parties
  • Escrow agents
  • Title companies
  • Qualified Intermediaries (for properties held for a 1031 exchange)

The Deferred Sales Trust strategy involves a complex and specialized legal process to comply with the Internal Revenue Code. In the past, the IRS performed field audits and an in-depth investigation into the DST method. Consequently, the IRS has determined that the DST strategy falls within the parameters of IRC§453, which governs the taxation of installment sales.

Like many other individuals, though, you may still wind up suffering an IRS audit. EPT tax attorneys take great pride and responsibility in their work and will be there to defend you should you come under investigation.

Registered Investment Advisor

At the initial creation of your DST, your trustee will help you evaluate your risk tolerance to determine an optimal interest rate on the installment note. The trustee will then consult with an EPT-approved independent investment advisor and formulate recommendations based on a history of producing the desired return within your parameters for risk.

For example, a younger client focused on using the DST assets to build wealth might tolerate high-risk, high-return investments such as mortgage REITs or high-yield bonds. Yet, other clients may sell their assets or businesses into a DST as an exit strategy structured to generate a steady stream of retirement income. In that case, the trustee and advisor might recommend “safer” investment options, such as US treasury notes, high grade corporate bonds, dividend stocks, or guaranteed insurance products, just to name a few.

Of course, your personal situation is almost never that simple. Your investment advisor will have extensive experience in researching market trends and analyzing investment methods. Furthermore, he or she will have received specialized training in managing the types of asset classes that have a history of producing the most reliable returns within the structure of a DST.

Request Your DST Analysis Today

Visit our website and complete a questionnaire to have a Certified DST Trustee evaluate the benefits of a Deferred Sales Trust for your situation. Do you have more questions about the DST strategy and the EPT core professionals? Schedule a one-on-one meeting via phone, video, or in-person today.