Florida Deferred Sales Trust Attorney

One of the most pressing issues associated with the sale of valuable assets — like real property, securities, and businesses — is having to pay capital gains taxes. For many years, though, wealthy individuals and families have been using deferred sales trusts (DSTs) to reduce their exposure to these taxes. But did you know that DSTs aren’t just for the ultra-wealthy? In fact, they’re ideal for anyone who’s worked hard to build their business, real estate, and other assets.

A DST is “The Tax Tool You Didn’t Know You Had” — and 453 Deferred Sales Trust Powered by Pennington Law can help set you up with one. We invite you to learn more about deferred sales trusts and discuss their suitability for helping you protect your wealth in an asset sale.

Discover your legal options for managing the tax implications of an asset sale. Contact us today for a free initial evaluation with a Florida deferred sales trust lawyer.

Why Choose 453 Deferred Sales Trust Powered by Pennington Law?

Given the complexity of the laws governing deferred sales trusts, you can best protect your legal options and financial interests by working with a knowledgeable attorney from 453 Deferred Sales Trust Powered by Pennington Law. Choose us to help you protect and manage your assets and wealth because:

  • Our firm provides clients with an all-in-one service. We handle various legal and financial matters, including trusts, taxes, financial reinvestment, and asset preservation. Many firms turn to outside professionals to assist with specific client needs. However, we have created an IRS-compliant program under one roof to handle all your needs or challenges.
  • Our attorneys have extensive experience across various complex legal areas, such as tax, trusts and estates, fiduciary matters, insurance, and asset protection.
  • Firm principal Andre Pennington has achieved national recognition for his knowledge of tax law, trusts, estate planning, and investment services, including in publications such as The New York Times, The Wall Street Journal, USA Today, and Forbes. He has also earned spots in top lawyer listings such as Super Lawyers, Best Lawyers in America, and Lawyers of Distinction. Our practice was also recognized as the Best Deferred Sales Trust Law Firm in the U.S. of 2024 by Best of the Best.
  • Our firm knows how to help you maximize your investments and wealth to protect the hard work you’ve done throughout your career.

What Is a Deferred Sales Trust and What Are Its Benefits?

So, what is a deferred sales trust? Also known as an installment sale trust, a DST is a legal tool that allows asset owners to manage the tax consequences of selling an asset that has increased in value during ownership.

With a deferred sales trust, an asset owner transfers their asset into a trust at a specific value, which sells it to the ultimate buyer. In exchange, the trust and owner enter an installment payment contract that governs how and when the trust must pay the sale proceeds or any income generated from investing the sale proceeds to the owner. The trust holds the sale proceeds after the sale, with the trustee potentially investing the funds.

The owner only becomes responsible for paying capital gains tax on the sale proceeds as the trust distributes them. Should the trust not distribute any portion of the sale proceeds, the owner may defer capital gains taxes indefinitely.

Advantages of deferred sales trusts include:

The primary tax benefits of DSTs include deferral of capital gains taxes, with asset owners only obligated to pay taxes if they receive any portion of the proceeds from the asset sale.

DSTs can invest sale proceeds to grow wealth for the former asset owner.

By managing or mitigating capital gains taxes, deferred sales trusts help individuals and families preserve the wealth they’ve built through properties or businesses.

DSTs offer 1031 exchange alternatives, allowing property owners to avoid some of the restrictions of 1031 exchanges. For example, the benefits of a deferred sales trust vs. a 1031 exchange include greater flexibility in reinvesting sale proceeds, as DSTs do not have a like-kind requirement, and greater flexibility in the timing of reinvestments.

A deferred sales trust may allow a property or business owner to perform a freeze on estate taxes, which can help manage the value of an individual’s estate to qualify for estate tax exemptions.

Deferred sales trusts offer significant flexibility and control as property/business owners engage in financial planning and wealth management.

Who Is a Deferred Sales Trust Best For?

Deferred sales trusts can benefit people from all financial backgrounds, not just the ultrawealthy. The following are examples of individuals who might seek out the financial benefits of DSTs:

  • Business owners contemplating selling their companies or ownership interests who want to manage the tax liabilities from a sale by spreading them over several years
  • Investment property owners who want to avoid a large capital gains tax bill if their property — including market investments and cryptocurrency — has substantially increased in value
  • Individuals approaching retirement who want to sell investments to diversify their portfolio or shift it to meet their retirement needs but who don’t want to lose value in their investments to taxes
  • People who have inherited property they want to sell while managing taxes from a sale

How Does a Deferred Sales Trust Work and How Is Income Generated?

The process of gaining deferral of capital gains taxes through a deferred sales trust involves several steps. DSTs can also generate income from asset sale proceeds instead of paying those proceeds to the former asset owner. DSTs work by:

  1. Transfer of Property or Business to the Trust – First, the asset owner must transfer their asset to the trust. In exchange, the owner receives an installment payment contract governing the payments the owner will receive from the sale proceeds or income generated by investing the proceeds.
  2. Trust Sells the Asset – After taking ownership of the asset, the trust sells it to the ultimate buyer and receives the sale proceeds.
  3. Sale Proceeds Held in Trust – The trust must continue to hold the sale proceeds, only paying them to the former asset owner per the installment payment contract.
  4. Proceeds Invested – A trustee often invests sale proceeds to generate income. The installment payment contract may pay this income to the asset owner instead of the principal from the sale proceeds, allowing the owner to defer capital gains taxes indefinitely. Generally, clients are exposed to investments that mitigate and, most times, eliminate the capital gains tax burden.
  5. Installment Payments to the Investor – The trust must distribute principal and income from the sale proceeds to the former asset owner as described in the installment payment contract, with the owner paying capital gains taxes on any distributions of principal from the sale proceeds. 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?

A valid deferred sales trust that allows an asset owner to defer capital gains taxes must meet several requirements, including:

An asset owner cannot have any influence or control over the trustee of a deferred sales trust, including through professional, personal, or familial relationships.

The trust must receive the sale proceeds directly from the asset buyer or a third-party intermediary, such as an escrow agent.

An asset owner must establish the deferred sales trust before selling their asset to the ultimate buyer.

In exchange for transferring the asset to the trust, the owner must receive an installment payment contract outlining their right to payment from the sale proceeds.

What Assets Are Suitable and Eligible for a DST?

In recent years, individuals and families have used DSTs to defer capital gains tax for various types of assets, such as:

  • Business assets
  • Business ownership interests
  • Real estate
  • Securities
  • Cryptocurrency
  • Stocks, bonds, and other investments
  • High-value collectibles, such as artwork, memorabilia, or rare vehicles

What Our Florida Deferred Sales Trust Attorneys Can Do

A DST involves complex tax and trust laws. At 453 Deferred Sales Trust Powered by Pennington Law, our Florida deferred sales trust lawyers will guide you through planning and implementing a legal strategy to manage the tax implications of selling an appreciated asset. When you turn to our firm, our attorneys will:

  • Review your financial circumstances and the details of your asset sale. Our legal team will thoroughly review your situation and the details of your proposed asset sale to evaluate your legal options for managing taxes on the sale, such as conducting the sale through a deferred sales trust.
  • Discuss your needs and goals to determine whether a deferred sales trust is the right tool to help you meet them. We will also take the time to sit down with you and discuss your financial needs and goals to help you determine the suitability of a DST.
  • Establish a DST correctly to avoid losing the trust’s tax benefits, paying capital gains taxes upfront, or paying penalties, fees, or interest on taxes. Our experienced lawyers will structure your trust to meet all legal requirements so you do not have to face penalties or interest on capital gains taxes.
  • Structure your deferred sales trust to meet your specific financial goals. We will set up your DST to serve your objectives, such as paying sale proceeds over a schedule to minimize the burden of capital gains taxes or deferring taxes indefinitely by only paying income from reinvested proceeds.

Contact a Florida Deferred Sales Trust Attorney Today

If you’re ready to sell an asset and want to manage or mitigate the tax consequences from the sale, a deferred sales trust can give you the legal tools you need to preserve your hard-earned wealth. Contact 453 Deferred Sales Trust Powered by Pennington Law today for a confidential consultation. A Florida deferred sales trust attorney from our firm can discuss DST strategies tailored to your financial needs and goals.