Texas Deferred Sales Trust Attorney

Have you begun planning to sell a complex, high-value asset like real estate or business interests? If so, you’re likely concerned that having to pay capital gains taxes on the sale will reduce the value of your hard work in building the asset. For years, wealthy families have used legal tools such as deferred sales trusts to manage and mitigate the tax consequences of asset sales. Now you can, too, as a deferred sales trust (DST) is “The Tax Tool You Didn’t Know You Had.”

Want to learn more? Contact 453 Deferred Sales Trust Powered by Pennington Law today for an initial evaluation with a Texas deferred sales trust attorney. You’ll discover the advantages of DSTs and how they can help you preserve and manage your wealth.

Why Choose 453 Deferred Sales Trust Powered by Pennington Law?

Setting up a deferred sales trust involves complex tax laws. An error or oversight can cause an asset owner to lose the tax benefits of a DST. As a result, you need highly experienced legal counsel to help you secure the advantages and flexibility of a deferred sales trust.

Why should you Turn to 453 Deferred Sales Trust Powered by Pennington Law to help you determine whether you need a DST and set up your trust?

  • Our firm offers an all-in-one service. Our legal team handles various legal and financial matters, including trusts, financial reinvestment, and tax issues. Whereas other firms rely on outside professionals to handle aspects of a client’s case, we’ve created an IRS-compliant program under one roof to ensure we can assist you with all your legal and financial needs.
  • Our attorneys have extensive experience and knowledge of complex areas of law, including estate planning, financial advisory services, tax, insurance, and asset protection.
  • Firm principal Andre Pennington is nationally recognized for his superb knowledge of tax, trust, and investment law, appearing in leading publications like The New York Times, The Wall Street Journal, Forbes, and USA Today, as well as prestigious, peer-reviewed lists including 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 work diligently to help you preserve the wealth you’ve worked hard to build 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 allows individuals who sell assets that have increased in value during their ownership to defer capital gains taxes on that increased value.

By selling an asset through a DST, an asset owner can defer paying capital gains taxes until the trust distributes the sale proceeds. Furthermore, the asset owner only pays capital gains taxes on the portion of the sale proceeds distributed to the owner. Thus, a deferred sales trust can defer capital gains taxes indefinitely if it keeps the sale proceeds.

Deferred sales trusts offer asset owners significant advantages. Some of the top financial benefits of DSTs include:

A deferred sales trust can reinvest the proceeds of an asset sale, allowing owners to increase their wealth further.

Most importantly, the tax benefits of DSTs allow asset owners to spread the payment of capital gains taxes from an asset sale or indefinitely defer taxes by keeping sale proceeds in the trust and only receiving payment of income generated by investments. 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.

DSTs provide 1031 exchange alternatives for asset owners. Benefits of a deferred sales trust vs. a 1031 exchange include greater flexibility in reinvesting sale proceeds, as DSTs do not have 1031 exchanges’ “like-kind” requirement, and more flexibility in the timing of reinvesting proceeds.

A deferred sales trust can also enable an estate tax freeze, which reduces the value of an estate to take advantage of estate tax exemptions and defers the appreciated value of investments to heirs and beneficiaries.

By deferring or minimizing capital gains taxes, deferred sales trusts allow families to preserve more wealth instead of paying taxes.

Deferred sales trusts give asset owners greater flexibility in managing their wealth, allowing them to reinvest, diversify, and manage tax liabilities.

Who Is a Deferred Sales Trust Best For?

Deferred sales trust can benefit plenty of other individuals besides the ultrawealthy. Examples of people who can benefit from setting up a deferred sales trust include the following:

  • A business owner contemplating selling their company who wants to spread out the impact of capital gains taxes over multiple years rather than dealing with a large tax bill after the sale
  • An owner of an investment property that has increased in value over the years — such as market investments and cryptocurrency — who wants to avoid paying capital gains taxes immediately after selling the property
  • A person approaching retirement who wants to sell assets or investments to diversify their portfolio without losing value to taxes
  • An individual who has inherited valuable property and wishes to sell it while mitigating the tax consequences of a sale

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

A deferred sales trust allows an asset owner to defer capital gains taxes on an asset sale and generate income by reinvesting the sale proceeds. The process of using a DST involves:

  1. Transfer of Property or Business to the Trust – First, an asset owner must transfer title and beneficial interest in an asset to the deferred sales trust. The owner cannot retain an interest in the assets or the expected sale proceeds.
  2. Trust Sells the Asset – After receiving the asset, the trustee sells it to a bona fide third party.
  3. Sale Proceeds Held in Trust – The trust must receive the sale proceeds directly from the buyer or a third-party intermediary like an escrow agent.
  4. Proceeds Invested – In many cases, a trustee of a deferred sales trust will invest the sale proceeds to generate income that can pay for trust administration expenses or provide distributions to the asset owner. This allows you to grow the proceeds through various investment strategies while still deferring and, most times, eliminating capital gains tax consequences.
  5. Installment Payments to the Investor – In exchange for transferring the asset to the trust, the owner receives an installment payment contract that entitles the owner to payments of principal from the sale proceeds or income generated by reinvesting the 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 deferred sales trust can defer capital gains tax if it meets specific legal requirements, including:

An asset owner must not retain any beneficial interest in the trust or the asset proceeds; furthermore, the owner cannot have any influence or control over the trustee.

The trust must receive legal title and beneficial interest in the sale proceeds. At no time can the asset owner have any interest in the proceeds.

An asset owner must establish the deferred sales trust before selling the asset to the buyer. Instead, the trust must conduct the sale.

The asset owner must sell their asset to the trust for fair value, and the trust must sell the asset to a bona fide buyer for the same price.

What Assets Are Suitable and Eligible for a DST?

With people from all financial backgrounds discovering the benefits of deferred sales trusts, many families have used these structures to preserve the value of various assets. Examples of assets commonly sold through a DST include:

  • 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 Texas Deferred Sales Trust Attorneys Can Do

When you are ready to set up a deferred sales trust to obtain tax benefits for your asset sale, let the Texas deferred sales trust lawyers of 453 Deferred Sales Trust Powered by Pennington Law help. We can guide you through the process of structuring a DST tailored to your needs and goals by:

  • Reviewing your financial circumstances and the details of your asset sale. Our lawyers will carefully review your financial situation and the details of the proposed asset sale to evaluate your legal options.
  • Discussing your needs and goals to determine whether a deferred sales trust is the right tool to help you meet them. Our team will also take the time to sit down with you to discuss your needs and goals to help you decide whether to pursue a deferred sales trust as part of your asset sale.
  • Establishing 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 lawyers have the legal knowledge and experience to correctly set up your deferred sales trust so you do not lose the trust’s benefits and face significant upfront taxes, penalties, and interest after your asset sale.
  • Structuring your deferred sales trust to meet your specific financial goals. We will ensure that your DST meets your financial objectives for your asset sale, whether that means managing and mitigating tax liabilities or deferring capital gains taxes indefinitely by only receiving payment of income generated from the investment of the sale proceeds.

Contact a Texas Deferred Sales Trust Attorney Today

If you need to sell an asset that has gained value during your ownership, a deferred sales trust can help you manage its tax consequences. Contact 453 Deferred Sales Trust Powered by Pennington Law today for a confidential consultation with a Texas deferred sales trust lawyer to discuss how DST strategies allow you to preserve the value of your investment.