Deferred Sales Trusts

A Deferred Sales Trust™ is a smart and legal way to defer capital gains tax and reduce the overall tax burden on the sale of businesses, real estate, and other highly-appreciated assets.

How It Works

1 . Sell to the Trust Instead of a Buyer

The seller transfers ownership of the asset to a specially created trust (the DST), before the sale.

2 . The Trust Sells to the Buyer

The DST then sells the asset to the end buyer, not the original owner.

3 . Seller Receives Payments Over Time

The seller receives payments from the DST over time (usually structured as an installment sale), which spreads out the capital gains and defers taxes.

4 . Earnings Grow Tax-Deferred

Meanwhile, the sale proceeds are invested by the trust, and any gains grow tax-deferred within the trust.

Benefits:

• Capital gains tax deferral (not avoidance)

• Income stream: You receive structured payments (often tailored to your needs)

• Estate planning advantages

• Diversification: You can reinvest proceeds in a broader range of investments

• No 1031 exchange deadlines (unlike real estate-specific deferral methods)

When to Consider It:

• You have a highly appreciated asset and want to sell without incurring a large immediate tax bill

• Don't want to manage a replacement property (as with a 1031 exchange)

• Or want to convert a lump sum into a steady income stream