Installment Trust
Legally defer your taxes for 10+ years using Installment Trust(IT).
What if you could sell your assets and pay $0 in taxes?
You can, and you actually should.
If you’re a business owner, commercial or residential real estate owner, or a corporation, you likely want to maximize profits from asset sales. But unfortunately, without an effective tax strategy, you’ll always have to contend with the Capital Gains Tax.
But here is a piece of good news:
With a Installment Trust (IT), you can defer your Capital Gains Tax completely and legally too.
Breaking it down…
The Capital Gains Tax is like that cunning guy who’s not a part of your business but is waiting by the side with hands open to get a share of your sales returns or profit. Capital gains rates are not fixed; they may rise and cost you up to 37% of your profit. That is quite a large chunk, and there are a million things you can do with it that don’t involve enriching the IRS.
On the bright side, Installment Trust (IT) is like Spiderman, here to save you and ensure that you keep your hard-earned money where it rightfully belongs – YOUR POCKET!
It leverages the Internal Revenue Code 453, a tax law that prevents taxpayers from paying taxes on money they haven’t yet received on an installment sale.
How Installment Trust (IT) Works:
With IT, the owner transfers the asset first to IT, and then the IT trust sells these assets to the buyer. Because the IT is the seller in this case, the IT will receive the sales proceeds. The owner is then compensated through an installment contract from IT, and the taxes are payable only on the amount he receives as an installment in the tax year.
Payment options are flexible in the IT agreement, and capital gains tax is due only when receiving payments. This tax is paid incrementally according to the terms of the contract.
The Installment Trust (IT) strategy, used for over 20 years, allows for capital gains tax deferral, and increased earnings through reinvestments. The processes involved in a Installment Trust (IT) could be pretty technical and complicated. However, with the help of a tax strategist, you can breeze through the process without breaking a sweat.
For a FREE tax savings analysis on your event/sale, please complete the form below
A member of our team will schedule a call with you to review the results of our analysis & to discuss if there is a more suitable or appropriate tax structure depending on your circumstance, so let’s start by taking a look at the details of your transaction!
FAQs & Most Common Questions
How can I know the amount of my payments from the trustee?
The payments are based on what you, the Seller/Taxpayer, arrange and pre-negotiate with the Installment Trust (IT) Trained and Approved Trustee. Depending on your income goals and other objectives, the amount and length of term of the installment sales note is your choice and subject to your 100% agreement.
What happens if I die?
With proper estate planning (i.e., by creating a Living Trust) scheduled installment note payments otherwise due to you can continue to pay to your legal heirs pursuant to the note term that you have chosen.
Are there any flexibilities or variability in the payment stream, such as increasing the payments over time?
Yes! The Installment Trust (IT) trained and approved trustee, in his/her absolute discretion, may allow you to refinance your installment sales note in order to extend or shorten the note term or to provide you with payments (or greater payments) of principal (and should you decide to take an “interest only” note initially).
Can I cancel the whole deal after a few years and get my money?
If the Installment Trust (IT) trained and approved trustee deems appropriate, He/She may elect to terminate the installment sales contract. However, you would immediately owe all the taxes, including all unpaid capital gains due from the original sale of the property/capital asset.
What happens if capital gain tax rates are changed after I set up the Installment Trust (IT)?
Politicians, from time to time, discuss changing capital gain rates. If that happens you would pay the new rate on the capital gains portion of your installment note payment. However, there is usually adequate notice to make a sound financial decision prior to any such change in taxation or tax rates.
Can I use my installment sales note to get back into real estate?
Yes, please contact the team or a duly qualified Installment Trust (IT) tax professional to discuss this option. We recommend that you work with Professional Advisers who are experienced in trust law, trust asset management and tax law as there are many situations that could “go wrong” if this is not implemented properly.
When the trust sells the property may I keep some of the cash from the sale?
Yes, in that case you would pay taxes only on the capital gain portion of the money which you kept for yourself outside the trust.
How can I have my tax adviser or attorney analyze the Installment Trust (IT)™ strategy?
For detailed technical information, have your CPA/attorney contact us for a full legal and tax cite package. The names Installment Trust (IT)™ and Installment Trust (IT) are common law trademarked names and are not found in the code. All of the legal and tax authority used in the Installment Trust (IT) are in the tax code, treasury regulations, cases, or rulings based upon the foundations found within the tax law.
How can I know the amount of my payments from the trustee?
The payments are based on what you, the Seller/Taxpayer, arrange and pre-negotiate with the Installment Trust (IT) Trained and Approved Trustee. Depending on your income goals and other objectives, the amount and length of term of the installment sales note are your choice and subject to your 100% agreement.
What are the fees involved with this type of strategy?
The fees involved depends on your particular situation (is this real estate? a business sale? crypto-currency sale?), but you can expect a minimum fee of 1.5% of Installment Trust (IT) assets as a one-time setup fee & .5% of Installment Trust (IT) assets/year.
I’m interested in finding out if this works for me. What should I do next?
It’s very easy! Your next step is to complete an “Illustration Request” on-line at: Request my Free iT analysis
Or, you can call and request a “free Installment Trust (IT) illustration” which will illustrate your particular facts and circumstances surrounding your potential sale as it relates to utilizing the Installment Trust (IT). Once you have received the illustration summary, you can then review this information with a trust case manager and share this information with your CPA (if not Tax Goddess) or tax attorney for further review.
