The Power of Deferred Sales Trusts (DST's), LFG Daily - January 23, 2026

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Deferred Sales Trusts:

A Powerful (and Often Misunderstood) Tool to Control Taxes

One of the biggest mistakes people make in financial planning is assuming taxes are just the cost of doing business. Sell a company? Pay the tax. Sell real estate? Pay the tax. Big liquidity event? Uncle Sam gets his cut and you move on.

But that mindset ignores one of the most important truths in wealth planning: timing matters just as much as totals. And that’s where deferred sales trusts enter the conversation.

A Deferred Sales Trust isn’t about avoiding taxes. It’s about controlling when you recognize them—and in many cases, significantly reducing the overall tax burden over time.

At a high level, a DST allows you to sell a highly appreciated asset—like a business, commercial real estate, farmland, or even a large concentrated stock position—without triggering immediate capital gains tax. Instead of selling the asset directly to a buyer, you sell it to a trust in exchange for an installment note. The trust then sells the asset to the buyer.

Because the sale to the trust is structured as an installment sale, the capital gain is recognized gradually over time, rather than all at once in the year of sale.

That distinction is everything.

Most people focus on tax rates. Sophisticated planners focus on tax brackets. By spreading income out over many years, a DST can keep you in lower brackets, reduce exposure to surtaxes like Net Investment Income Tax, and limit state tax exposure—especially if relocation is part of the plan.

But the benefits don’t stop there.

Once the trust sells the asset, the proceeds are no longer locked into the original investment. They can be diversified across markets, asset classes, and strategies—often far more flexibly than something like a 1031 exchange. That means you’re not forced to “trade one property for another” just to keep the tax deferral alive. You can actually align the money with your risk tolerance, income needs, and long-term goals.

For business owners, this is especially powerful. Selling a closely held business often results in a massive one-time tax bill that pushes you into the highest brackets immediately. A DST can smooth that income over 10, 20, even 30 years—turning a taxable event into a controlled income stream.

That income stream can be customized as well. Some people want predictable payments to replace operating income after a sale. Others want flexibility early and heavier distributions later. The installment note can be structured to fit the plan, not the other way around.

Now, a word of caution—because this is where DSTs get a bad reputation.

Deferred Sales Trusts are not DIY tools. They require proper legal structuring, independent trustees, third-party administration, and coordination with tax professionals. When they’re pitched as a “too good to be true” silver bullet, that’s a red flag. When they’re used as part of a broader planning strategy—with estate planning, cash flow planning, and investment strategy working together—they can be incredibly effective.

They also aren’t for everyone. Smaller transactions often don’t justify the cost or complexity. And if someone needs all their cash immediately, full deferral may not make sense. Like any advanced strategy, it has to earn its place in the plan.

But for the right client—someone facing a large taxable sale who wants flexibility, diversification, and long-term tax control—a Deferred Sales Trust can be a game-changer.

Good financial planning isn’t about finding loopholes. It’s about understanding the rules well enough to play the game intelligently.

And when it comes to major liquidity events, few rules matter more than when—and how—you choose to recognize income.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

Jobless Claims were 200K vs. exp. 209K, while Continuing Claims were 1.849MM vs. prev. 1.875MM. Nothing wrong, there.

November Core PCE price was 0.2% m/m, as expected. That does bump the Y/Y number up to 2.8% Y/Y, though.

Q3 GDP was revised up to 4.4% from 4.3%. Old data, and no meaningful change.

A US fleet is headed towards Iran, raising fears of weekend conflict and hitting stocks, a bit.

The BoJ voted to keep rates steady, with one vote for a rate hike. The yen was volatile after the news, with some thinking intervention may be near, with Japan buying the yen. Fears of a repeat of the 2024 carry trade unwind may be hitting stocks. That seems unlikely, as policy is looser.

Japan officially dissolved the lower house of Parliament and will hold snap elections on Feb. 8 in the hope the ruling party can expand their power.

PMI, today.

What does it all mean? The market has some concerns over Japan and Iran but nothing solid, yet.

Don’t leave your financial future up to chance. Let’s build a plan that gives you confidence today and peace of mind for tomorrow. Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

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