Using Tax Deferral Trusts to Mitigate Capital Gains
Introduction:
Deferred Sales Trusts (DSTs) have been gaining popularity in recent years as a powerful tool for deferring capital gains taxes on the sale of appreciated assets, such as a business, real estate, or stocks. If you're considering selling an appreciated asset and want to defer capital gains taxes, a DST might be the perfect solution. In this blog post, we will explore the benefits of a DST and provide an example of how an orthodontist sold his practice using a DST. We will also explain why Aegis Lion Law is the premier DST firm.
What is a Deferred Sales Trust?
A Deferred Sales Trust is a financial vehicle that allows the seller of an appreciated asset to defer capital gains taxes by redirecting the sale proceeds into a trust, rather than receiving the proceeds directly. The trust is managed by a third-party trustee, who invests the funds in a diversified portfolio of assets, generating income for the seller.
The seller can choose to receive regular payments from the trust or defer the payments to a later date. By deferring the payments, the seller can reduce their tax liability by spreading out the income over a longer period, potentially reducing their tax bracket and tax rate.
Orthodontist Example:
Let's take the example of an orthodontist who sold his practice for $5,000,000. If the orthodontist received the full amount of the sale proceeds, he would owe significant capital gains taxes. However, by using a Deferred Sales Trust, the orthodontist could defer the taxes and spread the income over a more extended period.
In this example, the orthodontist added $2,000,000 to the Deferred Sales Trust. The Trustee then invested the funds in a diversified portfolio of assets, generating income for the orthodontist. The orthodontist could choose to receive regular payments from the trust, defer the payments to a later date, or a combination of both.
By deferring the payments, the orthodontist could potentially reduce his tax bracket and tax rate, resulting in significant tax savings. Additionally, the orthodontist could use the trust funds to purchase additional assets, such as real estate or stocks, further diversifying his portfolio.
Why Choose Aegis Lion Law:
If you're considering a Deferred Sales Trust, you want to work with a firm that has the experience and expertise to ensure the trust is structured correctly and meets all IRS regulations. Aegis Lion Law is the premier DST firm, with a team of experienced attorneys who specialize in DST planning and implementation.
Our team will work with you to develop a personalized DST plan that meets your specific needs and objectives. We will guide you through the entire process, from establishing the trust to investing the funds and managing the income. Our commitment to delivering exceptional service and support has earned us a reputation as a trusted DST firm.
Conclusion:
Deferred Sales Trusts are a powerful tool for deferring capital gains taxes on the sale of appreciated assets. By redirecting the sale proceeds into a trust, rather than receiving the proceeds directly, sellers can potentially reduce their tax liability and spread out the income over a more extended period. If you're considering a DST, you want to work with a firm that has the experience and expertise to ensure the trust is structured correctly and meets all IRS regulations. Aegis Lion Law is the premier DST firm, with a team of experienced attorneys who specialize in DST planning and implementation. Contact us today to learn more about how we can help you defer your capital gains taxes and achieve your financial goals.
