623-229-0463 Iowa Deferred Sales Trust Attorney
Are you looking for a way to manage the tax burden of selling a high-value asset? Many people aren’t aware of deferred sales trusts, even though they’ve long been a key financial instrument of the ultra-wealthy. However, a deferred sales trust is “The Tax Tool You Didn’t Know You Had,” as it’s not just for the .01 percent.
At 453 Deferred Sales Trust Powered by Pennington Law, our team understands how to effectively set up and manage these trusts. A lawyer from our office can assess your situation and determine if a deferred sales trust is a good fit for you. Don’t miss out on this opportunity to manage your assets and taxes more effectively — contact us today for a free, no-obligation consultation to start exploring your options.
Why Choose 453 Deferred Sales Trust Powered by Pennington Law?
At 453 Deferred Sales Trust Powered by Pennington Law, we offer a unique blend of services and skills to manage your trust effectively. Here’s why you should consider us for your deferred sales trust needs:
We manage every aspect of your deferred sales trust (DST). This includes setting up irrevocable trusts and handling professional third-party trustee duties, financial reinvestments, and tax strategies. Unlike other companies that require you to work with various professionals across different agencies, our program is fully in-house and IRS-compliant.
Our team is well-versed in numerous relevant subjects, including tax law, estate planning, financial advisory, wealth and fiduciary matters, insurance, and asset protection. When you choose 453 Deferred Sales Trust Powered by Pennington Law, you’ll have a diverse group of knowledgeable professionals managing all aspects of your deferred sales trust.
Andre Pennington, our principal attorney, is nationally recognized for his deep knowledge of taxes, trusts, estate planning, and investment services. He has been featured in prestigious publications such as The New York Times, Forbes, Inc., The Wall Street Journal, and USA Today. He has also been selected for annual achievement lists 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.
We excel in maximizing the investment value of your assets. Our team understands that you have spent a long time curating your portfolio, and we’re here to help you secure the full potential value of your investments in the final stages. We work hard to optimize your returns through strategic planning and careful investment management for your DST.
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 type of legal arrangement that allows you to sell your assets without immediately paying taxes on the gains from the sale. Instead, the trust holds the money from the sale, and you receive payments from it over time so you can defer capital gains tax.
The following are some of the key financial benefits of DSTs:
The trust can invest the sale proceeds into various other assets so your wealth can grow over time within the trust.
One of the key tax benefits of DSTs is the ability to delay paying capital gains taxes on the sale of your assets until you receive distributions from the trust. 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.
Another advantage of a deferred sales trust vs. a 1031 exchange is that a DST provides more flexibility in reinvestment opportunities.
The value of the assets sold by the DST can be frozen at the time of the sale to reduce your estate taxes.
A deferred sales trust can help you preserve family wealth by providing structured, long-term financial benefits to your heirs.
With a DST, you have greater control over how and when your funds get distributed.
Who Is a Deferred Sales Trust Best for?
A deferred sales trust can be advantageous for anyone looking to manage large asset sales efficiently.
For instance, many business owners planning to sell their companies find deferred sales trusts useful because they allow for a smoother transition by deferring taxes and maintaining cash flow. People who own investment properties that have significantly appreciated — such as real estate, investments, and cryptocurrency — can also benefit from using DSTs to manage the large capital gains taxes that would otherwise be due upon sale.
Additionally, those approaching retirement can use DSTs to diversify their portfolios. They can secure steady income streams for their retirement years by selling off assets and placing the proceeds in a trust. Finally, those who have inherited valuable properties and are considering selling them can use DSTs to avoid immediate large tax hits and plan more strategically for the future.
How Does a Deferred Sales Trust Work and How Is Income Generated?
Deferred sales trusts are 1031 exchange alternatives that allow you to defer taxes and receive income after selling a high-value asset like real estate or a business. The following is how DST strategies typically work:
- Transfer of Property or Business to the Trust – Initially, you transfer your property or business into the deferred sales trust, so all the next steps occur within the legal framework of the trust.
- Trust Sells the Asset – Once the asset is in the trust, the trust is responsible for selling it. The trustee is in charge of finding a buyer and negotiating the sale.
- Sale Proceeds Held in Trust – The money from the sale is held within the trust. This keeps the funds secure and separates them from your immediate personal assets.
- Investment of Proceeds – Next, the trust actively invests the sale proceeds to generate stable returns. The trust may invest in stocks, bonds, real estate, or other assets, depending on the investment strategy outlined by your financial advisors and the terms of the trust. This allows you to grow the proceeds through various investment strategies while still deferring and, most times, eliminating capital gains tax consequences.
- Installment Payments to the Investor – Instead of receiving all the proceeds from the sale at once, you receive payments over time. 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?
Your deferred sales trust must meet specific requirements to function correctly and comply with legal standards. Here’s an overview of these requirements:
The trust must be a bona fide third-party trust. This means it must be managed by an independent trustee, unrelated to you, who will act impartially and manage the trust’s assets and transactions per the trust agreement and legal regulations.
When your trust sells the asset, all proceeds from the sale must go directly into the trust. This transfer is essential to defer capital gains taxes and for the trust to function as intended.
You must create the trust before selling the asset. This pre-sale formation establishes the trust’s authority to receive the sale proceeds and manage them according to the trust’s terms.
The trustee managing the trust should receive compensation for their services, typically a percentage of the assets under management or a fee based on the trust’s income and activities.
What Assets Are Suitable and Eligible for a DST?
Before you decide on a deferred sales trust, you should consider which types of assets are suitable and eligible for transfer into this type of trust. Here are some examples of assets that are commonly placed into a deferred sales trust:
Money from the sale of a business can go into a deferred sales trust so the former business owner can manage capital gains taxes and reinvest their earnings.
Shares or interests in a business can also be transferred into a deferred sales trust as part of a strategic exit or succession plan.
Real estate holdings are eligible for inclusion in a deferred sales trust, which can allow property owners to defer capital gains taxes on large real estate transactions.
Various securities, including public and private stocks, can be transferred into a deferred sales trust.
Bitcoin, Ethereum, and other cryptocurrencies can be included in a deferred sales trust, which can be particularly useful for investors holding these volatile assets.
Traditional investments like stocks and bonds can be placed into deferred sales trusts for continued growth and income distribution.
Items like art, rare collectibles, and other valuable personal assets can be placed into a DST to defer taxes and structure a gradual distribution of proceeds.
What Our Iowa Deferred Sales Trust Attorneys Can Do
Our Iowa deferred sales trust lawyers are here to guide you through every step of setting up and managing a deferred sales trust.
We start by reviewing your financial circumstances and the specific details of your asset sale to determine if a deferred sales trust is the right financial tool for your goals. If it is, we can conduct a comprehensive review of your situation to identify the best strategies for your needs. Then, we’ll establish your trust correctly to maintain its tax benefits and avoid any unnecessary penalties, fees, or interest.
Furthermore, we can customize the structure of your deferred sales trust to align with your unique objectives. This might involve structuring the trust to distribute sale proceeds over a schedule that minimizes tax burdens or to defer taxes entirely by only paying you income generated from reinvested proceeds. Our goal is to establish a trust that meets your specific financial requirements and personal goals.
Contact an Iowa Deferred Sales Trust Attorney Today
Ready to take the next step with your financial planning? 453 Deferred Sales Trust Powered by Pennington Law is here to help you explore how a deferred sales trust can benefit your financial strategy and tax planning. Contact us today for a free initial consultation with an Iowa deferred sales trust attorney.