623-229-0463 Connecticut Deferred Sales Trust Attorney
You’ve poured years of hard work and money into growing your investments, and now you’re ready to sell. There’s one big problem, though: capital gains taxes can significantly reduce your profits. The good news is there’s a way to defer capital gains taxes when you sell a highly appreciated asset: the deferred sales trust. It’s “The Tax Tool You Didn’t Know You Had,” one that can help you maximize your investments while providing additional funds for growing your wealth.
At 453 Deferred Sales Trust Powered by Pennington Law, we think anyone in Connecticut should have access to the same tax strategies that the ultra-wealthy have long enjoyed. Our Connecticut deferred sales trust lawyers can help you establish a DST, comply with IRS regulations, and handle any legal issues that might arise. Call now or complete our contact form for a free, no-obligation consultation.
Why Choose 453 Deferred Sales Trust Powered by Pennington Law?
There are complex rules you must follow to create a valid DST, and any mistakes you make along the way could put you crosswise with the IRS. To avoid these costly errors, be sure to work with a team that understands these complicated legal instruments. Here are a few reasons to choose 453 Deferred Sales Trust Powered by Pennington Law:
- Our well-rounded team has extensive experience with tax law and strategizing, estate planning, wealth management, insurance issues, fiduciary responsibilities, and asset protection. We craft strategies tailored to your specific financial needs.
- Andre Pennington is nationally recognized for his knowledge of tax and investment law. His work has appeared in The New York Times, Forbes, Inc., The Wall Street Journal, and USA Today, and he is also listed in Super Lawyers, Lawyers of Distinction, and Best Attorneys in America.
- We provide an IRS-compliant, all-in-one solution. Our program covers irrevocable trusts, professional trustee duties, reinvestment strategies, and tax filings—all handled under one roof for efficiency and convenience. Our practice was also recognized as the Best Deferred Sales Trust Law Firm in the U.S. of 2024 by Best of the Best.
- We can guide you in preserving and enhancing your wealth to help you get the full value of your investment. Your hard work deserves maximum returns, and we can help make that happen.
What Is a Deferred Sales Trust, and What Are Its Benefits?
So, what is a deferred sales trust? Also called an installment sale trust, a DST is a financial tool that lets you defer taxes on appreciated assets. Some financial benefits of DSTs include:
People sometimes ask us about deferred sales trusts vs. 1031 exchanges, and we usually tell them to opt for a DST. Unlike a 1031 exchange, a DST doesn’t limit reinvestments to like-kind properties. You gain the freedom to diversify your investments across various industries or asset types, providing more control over your financial future.
The tax benefits of DSTs can be significant when used properly. Instead of paying a large upfront tax bill, you retain more capital to grow your portfolio. 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.
A DST can increase the value of your assets over time by reinvesting profits. Whether you aim to diversify or consolidate your investments, a well-structured DST fosters steady financial growth while protecting your original assets.
A DST freezes your estate’s taxable value, reducing future estate tax burdens so that more of your wealth reaches your heirs and less goes into Uncle Sam’s pockets.
DSTs are highly customizable. You can adjust payouts and investments to match your financial goals and lifestyle.
A DST safeguards your assets, creating a lasting financial foundation for your family. It provides a solid strategy for maintaining and growing wealth across generations, ensuring your legacy endures.
Who Is a Deferred Sales Trust Best For?
Some people who can benefit from deferred sales trusts or other 1031 exchange alternatives include:
Selling a business or your ownership stake can result in a hefty tax bill. A DST allows you to defer capital gains taxes and receive installment payments from the trust, giving you more control over your financial future.
If you own a property that has significantly increased in value (such as real estate, market investments, and cryptocurrency), a DST can help you sell it while avoiding a substantial upfront tax payment. This option preserves more capital for reinvestment or other financial needs.
Those nearing retirement often need to liquidate assets to diversify their portfolio and increase their financial stability. A DST can help you avoid a large, immediate tax event from selling your current assets, leaving more for your retirement plans.
Selling inherited property can trigger significant tax consequences. A DST helps you manage the tax implications, preserving more of the property’s value for your financial goals.
How Does a Deferred Sales Trust Work, and How Is Income Generated?
Don’t worry if you have questions about how deferred sales trusts work and generate income. Here are the key facts to know if you’re interested in using a DST:
The first step is for the property owner to place their appreciated asset into a deferred sales trust, transferring ownership to the trust.
Next, the trust sells the asset to a third party. This structure prevents the seller from directly receiving the sale proceeds, meaning they avoid immediate tax consequences.
The trust keeps the proceeds from the sale. These funds remain untaxed initially, providing flexibility for future investments.
With the sale complete, the trustee (whoever manages the trust) reinvests the sale proceeds into income-generating assets. Investments may include stocks, bonds, or real estate. Generally, clients are exposed to investments that mitigate and, most times, eliminate the capital gains tax burden.
Finally, the original owner receives payments over time, offering steady income and spreading their tax obligations in more manageable installments, rather than your having to pay it all at once.
What Are the Requirements for a Deferred Sales Trust?
A Connecticut deferred sales trust attorney from our firm can explain the IRS rules for DSTs and make sure your trust meets the requirements. Key requirements for DSTs in Connecticut include the following:
- Bona Fide Third-Party Trust – A deferred sales trust must be fully independent and managed by a qualified, third-party trustee. The seller cannot retain any control over the trust’s operations or funds. This independence is essential to meet IRS requirements and maintain the tax advantages of a DST.
- Sale Proceeds Go to the Trust – After the sale, the proceeds must go directly into the trust. If the seller takes possession of the funds before transferring them, it creates an immediate taxable event. By directing the proceeds to the trust, you defer capital gains taxes and retain flexibility for reinvesting your profits.
- Pre-Sale Trust Formation – You must establish the deferred sales trust before the asset sale is finalized. In other words, a deferred sales trust cannot be applied retroactively. This means you must plan ahead to ensure the trust is ready to receive proceeds and manage the transaction in compliance with IRS tax rules.
- Due Compensation – All professionals involved in the trust’s management, including the trustee, financial advisors, and legal counsel, must receive fair compensation for their services. This requirement helps the trust meets fiduciary obligations and operates within legal guidelines.
Talk to a Connecticut deferred sales trust lawyer from our practice if you have any questions about these requirements.
What Assets Are Suitable and Eligible for a DST?
A deferred sales trust makes the most sense for selling assets that have seen significant growth since your initial investment. Some examples of assets that may fit a DST include:
- Your stakes in a business or the whole company
- Real estate
- Securities
- Cryptocurrency
- Stocks, bonds, and other investments
- High-value collectibles
What Our Connecticut Deferred Sales Trust Attorneys Can Do
Our attorneys offer personalized support to help you unlock the benefits of a deferred sales trust while avoiding common pitfalls. Here’s what we can do to help you make the most of your DST:
We begin by reviewing your financial situation and the specifics of your asset sale. This helps us identify potential tax-saving opportunities and craft DST strategies tailored to your circumstances.
Next, we’ll sit down with you to better understand your goals, whether that’s reducing taxes, diversifying assets, or securing a steady income stream. If a DST is the right tool, we’ll explain how it can help you achieve your vision.
Creating a deferred sales trust requires careful adherence to tax laws. We can make sure your trust complies with IRS regulations to preserve the trust’s tax benefits and shield you from penalties or fees.
We will tailor your trust to your specific objectives. Whether you want to schedule payments to minimize tax burdens or defer taxes entirely by reinvesting proceeds, we’ll create a structure that fits your plans.
Contact a Connecticut Deferred Sales Trust Attorney Today
Are you thinking of selling a high-value asset or business? If so, a Connecticut deferred sales trust lawyer can employ several DST strategies to help you retain more of the wealth you’ve worked so hard to create. Call 453 Deferred Sales Trust Powered by Pennington Law today or reach out online for a free, no-obligation consultation.