Inheritance tax planning is an important element of your wealth management strategy, as it allows you to continue to help your loved ones after you’re gone.

Those of us who own businesses, corporations, or commercial or residential investment real estate assets are often reluctant to sell because of capital gains taxes associated with the sale. But what other choice do we have other than a property exchange directed by a Qualified Intermediary? Is there another way to deal with the capital gains tax deficits that so many investors experience when they sell their real business or estate assets? The answer may lie in the Deferred Sales Trust™.
This capital gains tax deferral tool could save you thousands of dollars, and by having the opportunity to potentially make a profit on the money you would have paid to Uncle Sam in the year of the sale. Obviously, this strategy is gaining popularity among those who have highly appreciated assets that will be marketed for sale. You too can potentially take advantage of this opportunity once you understand how it works.

The process starts with initial due diligence. If the transaction is viable, the trust and property owner will negotiate to reach terms with regard to the asset(s). Then the property owner sells their property to a trust owned by a third party company. The trust sells the property or stock and pays you per the contract terms, making payments to you over an agreed period of time. There are typically minimal taxes to the trust on the sale since the trust purchased the property from you for the price that it anticipates that it can be sold for. The payment is made with an installment contract which makes payments to you over an agreed period of time.

The options on when and how payments can be made are flexible. You may have other income and don’t need the payments right away. The tax code doesn’t require payment of the capital gains tax until you start receiving installment payments. The capital gains tax is paid to the IRS with an “installment plan” since only that portion of capital gains tax is due in proportion to the number of years established in the term of the installment agreement.

The Deferred Sales Trust™ has the potential to generate more money over the long run than a direct and taxed sale.
There may be a more suitable or appropriate tax structure depending on your circumstance. We would like to have one of the Estate Planning Team’s tax specialists discuss your specific circumstances and goals with you.

For a FREE tax savings analysis on a commercial or investment property, or a stock or a business you own, please make an appointment with Michael Wallace so he can determine if this strategy can help you. You can reach him at 917-624-4348.