623-229-0463 Colorado Deferred Sales Trust Attorney
If you’re looking to sell real estate, a business, or another substantial asset that has increased in value, you’re probably concerned about capital gains taxes eating into your profits. In that case, deferred sales trust (DST) could be “The Tax Tool You Didn’t Know You Had.” While deferred sales trusts used to be the sole provenance of the ultra-wealthy, anyone can now take advantage of their tax-saving powers — even you.
At 453 Deferred Sales Trust Powered by Pennington Law, we use our extensive knowledge of DSTs and other tax avoidance strategies to help you protect your wealth and secure your family’s financial future. Don’t miss the opportunity to learn how a deferred sales trust can benefit you — call now or complete our contact form for a free, no-obligation consultation.
Why Choose 453 Deferred Sales Trust Powered by Pennington Law?
For Colorado residents, 453 Deferred Sales Trust Powered by Pennington Law delivers a comprehensive, streamlined approach to deferred sales trusts. We handle every aspect of the process, including creating an irrevocable trust to sell your asset, trustee management, reinvesting the proceeds of a sale, and making sure your DST complies with IRS regulations. By offering an integrated, IRS-compliant service, we eliminate the need to juggle multiple professionals across various firms.
Additionally, our team brings deep experience in tax law and strategies, financial advisory, estate planning, insurance, wealth management, and fiduciary matters. This diverse knowledge helps us develop a strategy that aligns with your specific goals and financial situation.
Finally, Andre Pennington is widely respected as a leader in tax, estate planning, and financial services. He’s been featured in many national publications, including Forbes, The New York Times, Inc., The Wall Street Journal, and USA Today. Pennington has also received honors from professional organizations like Super Lawyers, Lawyers of Distinction, and Best Attorneys in America. Our practice was also recognized as the Best Deferred Sales Trust Law Firm in the U.S. of 2024 by Best of the Best.
Whether you’re selling a business or property, we can use our experience and professionalism to make sure your financial future stays on track.
What Is a Deferred Sales Trust and What Are Its Benefits?
Let’s start with the essentials, including the most basic question of all: What is a deferred sales trust? In plain terms, a deferred sales trust is a financial strategy designed to defer capital gains taxes on the sale of high-value assets, like real estate or businesses. It helps you reinvest the proceeds tax-efficiently, preserving and growing your wealth. Creating a DST offers many financial benefits, including:
By using a DST, your sale proceeds can grow through diversified reinvestments, providing compounding wealth growth over time.
The tax benefits of DSTs are significant, as a DST lets you defer paying capital gains taxes, allowing you to reinvest a larger portion of your profits. Oftentimes, we at 453 Deferred Sales Trust Powered by Pennington Law employ financial strategists that mitigate and, most times, eliminate the impact of the capital gains tax.
When it comes to deferred sales trusts vs. 1031 exchanges, DSTs are the clear winner. DSTs are more flexible than 1031 exchanges, offering broader asset eligibility and no rigid timelines for reinvestment.
A DST can freeze the taxable value of your estate, reducing your heirs’ estate tax liability.
This trust structure safeguards your family’s wealth to help ensure financial resources remain intact for future generations.
Lastly, a DST offers unmatched flexibility, letting you customize your investment and income strategy to suit your personal and financial goals.
Who Is a Deferred Sales Trust Best For?
DST strategies provide significant benefits for people in many different financial situations. Some people who can make the most of the financial benefits of DSTs include the following:
Looking to sell your business? A DST lets you defer capital gains tax, reinvest your proceeds, and create a long-term strategy to grow your wealth.
If you own property that has significantly gained in value, such as real estate, market investments, and cryptocurrency, a DST lets you sell it without a hefty upfront tax bill.
A DST is ideal for people looking to diversify their investments during retirement planning while avoiding substantial tax liabilities.
Selling inherited property can trigger major tax obligations. A DST helps you manage taxes while protecting your financial future.
How Does a Deferred Sales Trust Work and How is Income Generated?
Working with a Colorado deferred sales trust lawyer is vital for avoiding trouble with the IRS and maximizing the return on your investment when you sell a high-value asset. The following are critical steps in selling an asset through a deferred sales trust:
First, you move your property or business into the deferred sales trust, preparing it for a tax-deferred sale.
Next, the trust sells your asset on your behalf. Since the trust is the seller, you avoid immediate capital gains tax liability.
The trust holds the proceeds from the sale, keeping them secure and allowing the trust’s managers to allocate the proceeds.
The trust reinvests the sale proceeds in a range of assets, such as equities or real estate, to generate long-term income and growth. This allows you to grow the proceeds through various investment strategies while still deferring and, most times, eliminating capital gains tax consequences.
Finally, the trust distributes payments to you in installments. (This is why DSTs are sometimes called installment sale trusts.) You can customize these payments to meet your needs, fit your financial plans, and reduce your tax burden. Your capital gains tax liability will spread and, most times, be minimized over a period of time, rather than your having to pay it all at once.
What Are the Requirements for a Deferred Sales Trust?
The IRS has strict guidelines for deferred sales trusts and other 1031 exchange alternatives, so it’s vital to get help from a knowledgeable attorney. The most important requirements for a deferred sales trust are:
The first requirement for a deferred sales trust is that it must be a genuine third-party trust managed by an independent trustee. The trustee must have no personal stake in the trust or the assets it holds. This separation ensures that the trust complies with IRS rules and is not viewed as a self-managed arrangement, which could jeopardize its tax-deferred benefits.
After the sale of your asset, the proceeds cannot go to you directly. Instead, they must go directly into the trust. The trust’s structure helps ensure that you defer capital gains taxes while maintaining access to an income stream through structured payouts.
To use a deferred sales trust, you must establish it before any sale agreement is signed. If the trust isn’t in place when the deal closes, you lose the opportunity to defer taxes. By setting up the trust in advance, you can complete the sale knowing your assets are protected and ready to work for you in a tax-efficient manner.
The trust must provide reasonable compensation to the trustee and other involved professionals for their services. This requirement is essential for meeting IRS standards and ensuring the trust is managed with the appropriate level of skill and acumen. Paying fair compensation also helps maintain the trust’s credibility and long-term success.
What Assets Are Suitable and Eligible for a DST?
You can use a DST to maximize your return on many kinds of assets, such as:
A DST is an excellent tool for business owners looking to sell and reinvest proceeds without facing an immediate tax hit.
Ownership shares in businesses, including partnerships or LLCs, are eligible for tax deferral under a DST.
Whether it’s an investment property or commercial real estate, a DST allows you to sell and reinvest without triggering taxes right away.
You can structure the sale of securities like stocks and bonds through a DST to defer capital gains taxes.
Profits from cryptocurrency transactions qualify for a DST, offering a way to reinvest while minimizing tax burdens.
DSTs are ideal for selling high-value investment portfolios while preserving capital for further financial growth.
You can sell valuable items such as art, antiques, and rare collectibles using a DST to avoid large tax bills.
What Our Colorado Deferred Sales Trust Attorneys Can Do
Our Colorado deferred sales trust attorneys begin by assessing your financial circumstances and evaluating the asset you plan to sell. This allows us to understand the details of your transaction and ensure you receive the best possible advice. We’re happy to answer any questions you have about the suitability of a deferred sales trust given your financial situation and goals.
We also take the time to learn about your long-term goals to determine whether a deferred sales trust is the right solution for you. Should a DST be suitable, we handle the process of setting it up properly. Establishing the trust incorrectly could result in losing the trust’s tax benefits or facing penalties, fees, or interest. We work diligently to ensure your trust meets IRS regulations.
Finally, we structure your trust to meet your unique objectives. Whether you aim to minimize taxes through a strategic payout schedule or defer taxes completely by using only income from reinvestments, we craft a plan that supports your financial goals.
Contact a Colorado Deferred Sales Trust Attorney Today
A Colorado deferred sales trust attorney from our firm is ready to help you grow your wealth through a deferred sales trust. Take the first step toward smarter asset management and tax planning now by contacting 453 Deferred Sales Trust Powered by Pennington Law today for a free, no-obligation consultation.