623-229-0463 Massachusetts Deferred Sales Trust Attorney
Are you aware of the tax-saving opportunities a deferred sales trust (DST) can offer? Many people are not familiar with these trusts because they’ve traditionally only been used by the ultra-wealthy. But they’re not the only people who can take advantage of them. Think of a DST as “The Tax Tool You Didn’t Know You Had” — one that can help you keep more of your hard-earned money.
A DST can reduce the taxes owed from the sale of businesses, investment properties, or other valuable assets. This process can be complex, but a Massachusetts lawyer from 453 Deferred Sales Trust Powered by Pennington Law is prepared to guide you every step of the way.
Interested in discovering how a DST could benefit your financial situation? Reach out to us today for a free initial consultation with a Massachusetts deferred sales trust attorney.
Why Choose 453 Deferred Sales Trust Powered by Pennington Law?
If you’re considering a deferred sales trust, selecting the right firm to manage your transaction is critical. At 453 Deferred Sales Trust Powered by Pennington Law, we offer a distinctive blend of services tailored to meet your needs in an all-encompassing manner. Here’s why you should work with us:
From creating irrevocable trusts and handling professional third-party trustee duties to managing financial reinvestments and tax filings and strategies, we manage every aspect of the deferred sales trust process in-house. While most companies rely on different professionals from various agencies, our firm offers a full, IRS-compliant program under one roof.
Our firm has extensive knowledge and experience in critical areas such as tax law, estate planning, financial advisory, fiduciary matters, insurance, and asset protection. This diverse background allows us to skillfully manage all aspects of your deferred sales trust.
Andre Pennington, our lead attorney, is nationally recognized for his proficiency in tax, trusts, estate planning, and investment services. His knowledge has been highlighted in prestigious publications like The New York Times, Forbes, Inc., The Wall Street Journal, and USA Today. Additionally, he has been named to annual 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.
Our goal is to maximize the value of your investments. We understand how to capitalize on the final steps of your transaction and help you obtain the full value for the hard work you’ve put into building your business.
What Is a Deferred Sales Trust and What Are Its Benefits?
So, what is a deferred sales trust? It’s a financial arrangement that allows you to defer capital gains taxes when selling assets by transferring ownership to a trust before the sale. This strategy is especially useful for those looking to sell highly appreciated assets such as real estate or businesses. Here are some key financial benefits of DSTs:
A deferred sales trust can help you continually grow your money. Reinvesting the funds within the trust can increase your wealth over time through investment gains.
One of the primary tax benefits of DSTs is the ability to defer capital gains taxes, which allows you to keep more of your money working for you. 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 benefit of a deferred sales trust vs. a 1031 exchange is that a deferred sales trust can be used for a variety of assets.
When you place your assets in a deferred sales trust, you effectively freeze the value of these assets for estate tax purposes at the time of transfer.
A deferred sales trust can preserve family wealth across generations, ensuring it benefits your family in the long run.
Deferred sales trusts allow you to decide when and how to receive income from the trust, giving you greater financial flexibility.
Who Is a Deferred Sales Trust Best for?
A deferred sales trust is an excellent option for anyone seeking a smart way to manage significant financial transactions.
Business owners planning to sell their companies find these trusts particularly valuable, as DSTs allow them to defer taxes while potentially growing their wealth. A DST can also be beneficial for people with investment properties that have appreciated over time, such as real estate, market investments, and cryptocurrency. By using deferred sales trusts, they can avoid large tax hits and strategically reinvest their earnings.
People approaching retirement and wanting to diversify their portfolios can also benefit from DSTs by selling off assets in a tax-efficient manner. Additionally, anyone who has inherited valuable properties and is considering selling can use deferred sales trusts to manage potential taxes and maintain financial stability.
How Does a Deferred Sales Trust Work and How Is Income Generated?
A deferred sales trust is a 1031 exchange alternative that helps you manage large financial transactions and defer taxes. Here’s how DST strategies work:
You start by transferring your asset(s) into the trust. This is the first step in repositioning your investment under the trust’s control.
Once the trust holds the asset, it is responsible for selling it to generate liquid capital from the asset, which can then be managed more flexibly.
The money gained from the sale of the asset is held within the trust to keep the funds secure and separate from your personal finances.
The trust then invests these proceeds in various financial instruments according to a pre-agreed strategy designed to balance growth with risk management. This allows you to grow the proceeds through various investment strategies while still deferring and, most times, eliminating capital gains tax consequences.
Finally, you receive payments from the trust in installments, which can provide a regular income stream and spread out any tax liabilities. (DSTs are also known installment sale trusts.) 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 arrangement complies with legal standards and achieves your financial goals. Understanding these key elements can help you determine if this strategy is right for you. Here are the basic requirements for establishing a deferred sales trust (or other 1031 exchange alternatives):
The trust must be a bona fide third-party entity. This means it needs to be legally recognized and managed by a party that is independent of you.
All proceeds from the sale of your asset must go directly into the trust. This transfer confirms the trust’s role in managing and distributing the funds according to the trust agreement and tax regulations.
You must establish the trust before the sale of the asset takes place. Setting up the trust in advance is essential to ensure that the sale process and subsequent management of funds comply with legal standards.
The trustee managing your DST must receive appropriate compensation for their services, which might include overseeing the asset sale and handling investments and distributions according to the trust agreement.
What Assets Are Suitable and Eligible for a DST?
A deferred sales trust can be a versatile tool for managing large financial transactions involving numerous types of assets. Here are the kinds of assets that are suitable and eligible for a DST:
Profits from the sale of a business can be placed into a DST, allowing for the deferral of capital gains taxes and the opportunity for reinvestment.
Shares or other interests in a business can go into a DST, which is especially useful for owners preparing for retirement or changes in investment focus.
Residential, commercial, and investment properties are eligible for DSTs, offering a way to manage taxes from large property sales.
Investments like stocks and bonds can be sold and the proceeds moved into a DST to manage potential capital gains.
As a newer asset class, cryptocurrencies can also be placed into a DST, providing a way to handle the volatile market conditions and the associated tax implications.
Other marketable securities are suitable for a DST and can benefit from the trust’s structure.
Items such as art, antiques, and other collectibles that hold significant value can be sold and the proceeds managed through a DST.
What Our Massachusetts Deferred Sales Trust Attorneys Can Do
Our Massachusetts deferred sales trust attorneys are here to guide you through the process of managing your asset sales in a way that maximizes your financial benefits and minimizes tax liabilities.
First, we will review your financial circumstances and the specific details of your asset sale to understand the complete picture. We’ll discuss your personal needs and goals to determine if a deferred sales trust is the right tool for your situation.
Next, our attorneys will work diligently to set up your deferred sales trust correctly so you avoid losing the trust’s tax benefits or incurring unnecessary penalties, fees, or interest. Moreover, we will tailor the structure of your deferred sales trust to meet your unique goals. This might include arranging the payout of sale proceeds over a schedule that reduces tax burdens or even deferring taxes entirely by only paying out income generated from reinvested proceeds.
Our team works hard to ensure that your deferred sales trust aligns perfectly with your long-term financial strategy.
Contact a Massachusetts Deferred Sales Trust Attorney Today
Ready to explore how a deferred sales trust could benefit your financial planning? Contact 453 Deferred Sales Trust Powered by Pennington Law today for a free initial consultation. Let a Massachusetts deferred sales trust lawyer help you understand your options and explain how we can set up a trust that aligns with your financial goals.