Deferred Sales Trust Strategy

Find yourself in the enviable position of the sale of an asset which could trigger a capital gain event? First, be thankful you made a profit. Then, figure out a way to minimize your tax liability. The laws are there for those who are astute, to take advantage of. One such strategy is called a Deferred Sales Trust and here’s how it works.

At some point before closing, you set up a trust and convey ownership of the asset to which the proceeds of your sale shall fund. This Trust will act as a tax shelter exempt from income, depreciation recapture and be protected from creditors or lawsuits at well. The funds are nontaxable on the way into the Trust and can be passed risk-free to your heirs without the heavy burden of estate or gift taxes.

There is no limit as to the amount of funds you may infuse into the Trust and once it’s funded, you have total control over the money. Many set up annuities to provide a lifetime of income stream being only taxed based on the amounts withdrawn. Consult your CPA or financial advisor to see if this strategy Is right for you.

To learn more about DST, visit www.taxalmanac.org/index.php/Discussion:Deferred_Sales_Trust

If any of my readers have had experience setting up a DST, please comment and elaborate as to your experience.

See also: How Credit Scoring Works, Loan Modification

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