623-229-0463 Maryland Deferred Sales Trust Attorney
Are you looking for ways to manage taxes from the sale of your assets? Deferred sales trusts are a powerful option that has typically been used only by the ultra-wealthy. However, this tax strategy isn’t just for the rich — it can be used by anyone. Think of it as “The Tax Tool You Didn’t Know You Had.”
A lawyer from 453 Deferred Sales Trust Powered by Pennington Law can review your situation and help you set up a deferred sales trust that meets your specific needs. This approach could potentially save you significant amounts in taxes and support your financial goals.
Don’t miss out on discovering how this strategy can benefit you. We invite you to contact us today for a free initial consultation with a Maryland deferred sales trust lawyer, where you’ll learn how it could be the solution you need.
Why Choose 453 Deferred Sales Trust Powered by Pennington Law?
At 453 Deferred Sales Trust Powered by Pennington Law, we offer unique advantages that make us the ideal choice for those looking to maximize their investments and comply with IRS regulations. Here’s why you should consider our services if you’re considering a deferred sales trust:
We manage everything in-house. From setting up irrevocable trusts and handling professional third-party trustee duties to managing financial reinvestments and taking care of all necessary tax filings, we do it all. Unlike most companies that outsource different aspects to various professionals, our seamless program is fully integrated and IRS-compliant.
Our team boasts extensive knowledge and experience in complex areas such as tax law, estate planning, financial advisory, fiduciary matters, insurance, and asset protection. This diverse background allows us to provide a holistic approach to managing your assets and planning for your future.
Andre Pennington, our principal attorney, is nationally recognized for his mastery in tax, trusts, estate planning, and investment services. He has been featured in major publications such as The New York Times, Forbes, Inc., The Wall Street Journal, and USA Today. Additionally, he is regularly listed in annual rankings such as 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 understand the importance of maximizing the return on your investments. Our strategic approach focuses on helping you get the full value of your hard-earned investments at the final step of the sale. We’re here to help you build and preserve wealth efficiently and effectively.
What Is a Deferred Sales Trust and What Are Its Benefits?
So, what is a deferred sales trust (DST)? Also called an installment sale trust, a DST is a strategic financial tool that allows you to defer capital gains taxes when selling properties or businesses. Using a DST involves transferring ownership of an asset to the trust before it is sold, allowing you to manage tax liabilities effectively while still benefitting from the asset’s value.
The following are some of the main financial benefits of DSTs:
By deferring taxes, you retain more capital to reinvest and grow over time, potentially increasing your overall wealth.
Among the key tax benefits of DSTs is that they allow you to postpone capital gains taxes on the sale of assets and keep more money in your pocket now. 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 1031 exchange requires reinvestment in similar kinds of properties and comes with other restrictions. As such, another benefit of a deferred sales trust vs. a 1031 exchange is that a deferred sales trust provides more flexibility.
Using a deferred sales trust can freeze the taxable value of your estate assets, which can reduce future estate taxes upon transferring wealth to your heirs.
A DST can be an effective tool for estate planning, preserving, and passing on your wealth to future generations according to your wishes.
A DST offers you greater control over the timing of income recognition, which helps in planning for lower tax brackets.
Who Is a Deferred Sales Trust Best for?
A deferred sales trust is an ideal solution for anyone considering a major asset sale or financial transition.
For instance, business owners planning to sell their companies find deferred sales trusts beneficial as they can manage the large capital gains taxes that typically come from such sales. Similarly, people who own investment properties that have significantly appreciated — such as market investments and cryptocurrency — can also benefit from DSTs by deferring taxes while still leveraging the financial growth of their investments.
For people selling assets as they approach retirement, DSTs help them manage this transition smoothly without a heavy immediate tax burden. Additionally, those who have inherited valuable properties and wish to sell them can benefit from DSTs because these instruments allow them to efficiently manage the potential taxes on large gains.
How Does a Deferred Sales Trust Work and How Is Income Generated?
Deferred sales trusts are 1031 exchange alternatives that help you defer taxes on the gains generated from the sale of high-value assets like businesses or properties. The following is a step-by-step breakdown of the process by which DST strategies work and how they generate income for investors:
Initially, you transfer ownership of an asset or business you wish to sell into the trust to set the stage for the subsequent sale.
Once the asset is in the trust, the trust then proceeds to sell it. This converts the asset into liquid capital, which can then be used for further investment.
After the sale, the proceeds from the asset are held within the trust. This holding phase is important for managing the timing of tax liabilities.
Next, the trust strategically invests the proceeds from the sale into various financial instruments or other assets to generate ongoing income for the beneficiary. 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 makes periodic installment payments, funded by the income generated from the investments, to the investor. 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?
Setting up a deferred sales trust involves meeting specific requirements to ensure the trust’s validity and effectiveness in tax deferral. The following are the key requirements:
The trust must be a bona fide third-party entity. This means it should be legally recognized and managed by an independent trustee unrelated to you. This ensures that the trust can operate with impartiality and legitimacy.
All proceeds from the sale of the asset must be transferred directly to the trust to maintain the trust’s integrity and ensure that the funds are managed per its stipulations.
The trust must be established before the sale of the asset takes place to maintain the effectiveness of the tax deferral strategy.
The trustee managing the trust must receive due compensation for their services to avoid any conflicts of interest and ensure professional management of trust assets.
What Assets Are Suitable and Eligible for a DST?
A deferred sales trust is a flexible tool that can accommodate a variety of assets, making it a valuable option for many investors looking to defer capital gains taxes. Here’s a breakdown of the types of assets that are typically eligible and suitable for a DST:
Proceeds from the sale of a business can be placed into a DST so former owners can defer taxes while potentially continuing to earn from the invested funds.
Interests in businesses, whether in part or whole, can go in a DST.
Real estate assets, including commercial and residential properties, are commonly placed in DSTs so owners can manage taxes from sales.
Various securities, such as bonds and stocks, can be transferred into a DST.
Bitcoin, Ethereum, and other forms of cryptocurrency can also be placed in a DST, which is particularly useful given their volatile nature and potential for high gains.
Stocks and bonds, along with other similar investments, are eligible for placement in DSTs.
Art, antiques, or other rare, high-value collectibles can also be included in a DST to defer taxes on gains from such items.
What Our Maryland Deferred Sales Trust Attorneys Can Do
Our Maryland deferred sales trust attorneys are equipped to guide you through every step of the process of setting up and managing a deferred sales trust.
We start by discussing your personal needs and goals to determine if a deferred sales trust is the right tool for achieving your objectives. Then, we’ll review your financial situation and the specifics of your asset sale to ensure that every detail aligns with your financial strategy.
Our attorneys will structure your trust to tailor it specifically to your needs. This could mean scheduling payouts from the sale proceeds to minimize tax burdens or arranging for taxes to be deferred entirely by only distributing income generated from the reinvested proceeds. We will handle all of the legal details carefully to safeguard against losing tax benefits or facing unnecessary penalties, fees, or interest.
Our team’s goal is to make the entire process as smooth and beneficial as possible.
Contact a Maryland Deferred Sales Trust Attorney Today
Ready to explore how a deferred sales trust can benefit you? Our Maryland deferred sales trust lawyers are ready to discuss your needs and explain how this powerful tax strategy can work for you. Contact 453 Deferred Sales Trust Powered by Pennington Law today to arrange your free initial consultation.