The Deferred Sales Trust (DST) allows a seller to defer capital gains taxes on the sale of an asset by structuring the transaction as an installment sale to a trust. The trust then resells the asset to the ultimate buyer. Payments from the buyer to the trust are passed along to the original seller over time. This delays paying taxes until the seller actually receives payments. There are no restrictions on how the trust can invest funds received. Common assets sold using DSTs include real estate, businesses, stocks, and insurance policies. The costs are based on the sales price of the underlying asset. Professional fiduciaries typically serve as trustees to administer the trust.

1. DeferredSalesTrust™ FrequentlyAskedQuestions
What isa DeferredSalesTrust™?
The DeferredSalesTrust™ isa Trust that purchasesthe Seller'spropertyandthenresellsittothe
ultimate buyer.Itallowsthe Sellertotreatthe sale as a "Seller-carryback"transactionwhere the buyer
paysthe purchase price overtime.The language inthe Trustdocumentsandthe purchase documents
(referredtoasthe "DST Note") betweenthe Trust andthe Sellercause the Seller'sincome tax otherwise
due on the sale to be deferreduntil the Selleractuallyreceivesthe moneyfromthe Trust.Afterthe
assetissoldby the DST to the ultimate buyer,the Trustmayinvestthe fundsinanyassetof its choice.
There are noinvestmentrestrictions,ortimeframesforwhichinvestmentsare tobe made.
What Typesof AssetsCan be SoldUsingthe DST?
Justabout anyasset thatis subjecttocapital gainstaxationcan be deferredwiththe DST.These assets
include rental properties,primaryhomes,commercial properties,private stocksandbonds,family
businessesandyourinsurance policiesthatneedtobe soldforcash. Most commontypesof assetsales
usingthe DST are the sale of real estate andthe sale of a business.The DSTcan be sometimesbe used
for othertypesof assetsalesandtransactionssuchas:
a 1031 Exchange that wouldotherwisefail tobe properlycompletedcanbe "rescued"usingthe DST;
The refinancingof a note receivablefromathirdparty;
Salesof marketable securitieswhere thereare restrictionsonthe stockor limitedtradingvolumeof
such stock;
Whenis the Tax onthe Sale Paid?
The Sellersetsupthe timelineof whenthe paymentswill be made (interestandprincipal)andthe
amountof eachpayment.The paymentscanbe structuredin anytimeline andamountthatthe Seller
wishes.Theycanbe interestonlywiththe principalamountpaidinone balloonpaymentatthe end,or
where there are evenpaymentspaidoverthe termof the structure.Regardless,the taxesonthe gain
are triggeredwhenthe principalpaymentsare received.Capital gainsratesinthe yearthe paymentis
receivedisthe rate appliedtothe principal paymentsasreceived.The interestearnedonthe principal is
taxedat ordinarytax rates inthe year received.
What are the costs involvedindoingaDST?
The costs are basedonthe salesprice of the underlyingassetinvolvedinthe transaction.(See chart
below) Please call andspeakwithaDST case manager – 805-284-5262
General DST Fee Chart:
Gross SalesPrice of the assetbeingsold:
$1-Millionandunder:1.50% $1-Millionandover:1.25%

2. If my clienthasmultiple AssetsorPropertiesthattheywantto sell overaperiodof time can the DST
work?
Yes.One DST structure will suffice formultipleassetssoldoveraperiodof time.However,planningis
requiredforeachassetsoldat differenttimesandnew documentsmustbe executed.Eachsale will
require itsownseparate DSTNote but the same Trust can be used.The original fee scheduleshall apply
to the sale of eachadditional assetsaddedtothe original Trustwiththe preparinglaw firm.
How can I bestexplaintheseconceptstomyclients?
The DST providesameanstosell yourassetin a mannerthat allowsyoutoget the tax benefitsof a
"SellerCarryback"type transactionwhere youreceive yourpayment,and you’re taxedovertime
withoutsustainingthe same levelof riskthatan inexperiencedbuyerorilliquidbuyermaycause.During
thistime periodanduntil the installmentpaymentisfullypaid,yourclientshave the advantageof
havinga largeramountof cash workingforthemto achieve more value overthatselectedinstallment
period.Withadditional planning,the DSTcan be usedinconjunctionwithestate planningdevisesto
allowyouto transferyourclient'sassetstotheirheirs,free Federal Estate Tax,GiftTax and GST Tax.
What isthe total amountof assetsthatcan be soldina DST perpersonperyear?
The Seller/taxpayercancreate an installmentnote upto$5 Millionperpersonperyear.Thus,if your
taxpayerismarried,thenupto $10 Millionpercalendaryearcan be soldusingthe DST. If the sale is
nearthe endof the yearor beginningof the year,thenactionmaybe takento spreadthe transaction
across twocalendarsyearsto double thisamount.
Who can serve as Trustee orManager and whatis the cost for thisservice?
We onlyallowprofessional fiduciariesserveasthe Trustee.Manypeople have usedtheirfamilyfriend,
attorney,accountant,or a combinationof bothusinga Co-Trustee scenario.WhenCo-Trusteesare
employed,boththe professionalfiduciaryasTrustee andthe Co-Trustee mustsignoff onany DST
transaction.Thismethodallowsfor a'checks andbalances'procedure thatcan provide anotherlevelof
protectionforthe Seller/Taxpayer.
How doesthe Deferral processwork?
The longerone can deferthe installmentpayments,the longerthe moneycan'work'and allow forsome
incrediblegainsthroughthe magicof compoundinterest.The amountandtimingof paymentsis
somethingthatshouldbe discussedwiththe DSTfinancial advisorandTrustee.
Is the DeferredSalesTrust™ anInsurance product?
Sometimesthe general publicbecomesconfused andthinksthisisastructure sale withacommercial
annuitytype of product.The DeferredSalesTrust™ doesnotinvolveinsurance.However,commercial
annuitiesandsecuritiescanbe usedaspart of the investmentsinsidethe DST.Butthat is simplyone
investmentoption.

3. Can my clientsgetloansagainstthe DST?
Seller/TaxpayercanborrowagainsttheirDST Note.Banksare alwayslookingtomake loansagainst
assets.The DST Note or the assetsof the Trust are assetsthatcan serve ascollateral fora loan.We have
banksto referyourclientstothat will make suchloans.
What happenstothe DST whenIdie?
If the Seller/Taxpayerdiesbefore the DSTNote isrepaidthenthe Trustee willcontinuetopaythe heirs
of the Seller/Taxpayeruntil the DSTNote is repaid.Oftenthe Seller/Taxpayerholdsthe note intheir
livingTrustsothe note will passtotheirheirswithoutprobate.
What if the Clienthasa LivingTrust already?
Thisis fine.The livingTrustusuallybecomesthe holderof the DSTNote,andthus, the DST Note is
transferreduponthe Client'sdeathinthe same mannerasthe otherassetsinthe livingTrust.
Is the DST includedinmytaxable estate?
Seller/Taxpayershouldknow thatthe DSTNote wouldbe includedintheirtaxable estate justlike any
otherasset. We will workwithyoutoeducate the DST clientabouttheirpotential estate taxes.If there
are estate tax problems, we andthe tax lawyerscanhelpto workto reduce theirestate tax liability.
Is the DST a Trust thatcan protectmy assets?
Seller/Taxpayercannotrelyonthe DST to protecttheirassets.The Seller/Taxpayershouldknow thatthe
DST is an assetthat belongtoyouand that a creditorcan attach your DST Note payments.However,
creditorscannottouch the assetsinthe Trust. Thus,the DST servesasa great deterrentagainstcreditors
because the onlythingthe creditorcan getto isthe paymentstobe made underthe DST Note per the
termsof the DST Note.Therefore,mostcreditorsare willingtosettle forfarlessafternegotiatingwith
youfor a lumppaymentupfront.
There are otherassetprotectiontoolsthatcan workin conjunctionwiththe DSTto protectyourassets.
Please call usaboutthe differentTruststhatoffertrue assetprotection.
What isthe bestwayto market the DST to the general public?
Work witha professionalpartner(CPA's,Real Estate professionals,andotherstohelpyoumarketthe
DST to Seller/Taxpayers).Use yourDSTwebsite toeducate eachSeller/Taxpayerwiththe correct
information.Teacheachprofessional partnertogettheirownDST website anduse itas a tool to
educate soyou bothcan benefitandhelpthe Seller/Taxpayerssave incapital gainstax.
Why isit so importanttohave a tax attorneyclose the DST?

4. Seller/Taxpayerneedtobe protectedindoingtax savingtransactionbytax lawyerswhounderstandU.S.
Tax laws.Dealingwithlawyerswhospecialize inimplementingthe DSTwill helpyourcase close,asthey
will understandthe detailsof the DST.We findso manylawyersandCPA'sdon't understandthe DSTand
don't have a strongtax background.Each outside professional lookingatthisstructure hasto make sure
that the DST is a soundstructure for theirclients.The tax lawyerwhospecializesinthe implementation
of the DST isby far the bestrepresentationforyouoneverycase.
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