1. Brought to you by Parse Financial Wealth Management
DEFERRED SALES TRUST™
Brought to you by Parse Financial Wealth Management

2. Deferred Sales Trust™ Parse Financial Wealth Management
Brought to you by
Parse Financial Wealth Management

3. Deferred Sales Trust™ Tax Efficient Exit Strategy
Sell more real estate
Get clients off the sidelines
Position yourself for success
A Deferred Sales Trust TM – DST TM is a strategy that allows a Client to sell an appreciated asset, receive the proceeds as liquid cash and pay capital gains taxes over many years rather than immediately.  The possible benefits include reliable income from the trust, flexibility in how the trust is invested (i.e. bonds, stocks, or real-estate), protection from lawsuits and creditors, and with the proper planning, the assets can be arranged to pass to your beneficiaries estate and gift tax free.

4. Meet John & Patty… Their Story: Bought a hotel for $5,800,000
Selling the property for $8,000,000 Mortgage Payoff: $2,400,000
Equity gain: $2,200,000
Depreciation: $400,000
Taxable Gain: $2,600,000
Personal Information:
Married, John age 54, Patty age 51
37 year actuarial life

5. Normal Transaction Sell Property Real Estate John & Patty
Age: 54 and 51
Net Sale Proceeds $5,600,000
Sale Price $8,000,000
Mortgage
Payoff
$2,400,000
Taxable Gain $2,600,000

6. Normal Taxation Real Estate Sell Property Net Sale Proceeds $5,600,000
Sale Price $8,000,000
John & Patty
Age: 54 and 51
Federal and State* taxes: 24.3%
*California
Depreciation lowers basis which increases Gain
Taxable Gain: $2,600,000
Depreciation: $400,000
$4,968,200
After tax proceeds
Taxes: $631,800

7. Compare Normal vs. DST
Real Estate
Sell Property
John & Patty
Normal Transaction: $4,968,200 grows to $ 1,058,384
With the DST: $5,600,000 grows to $ 8,698,137
Both assume 7% growth and $372,159 per year for 37 years
Difference is the compounding of $631,800 for 37 years
The annual distribution and actuarial calculations are taken from a DST illustration. Assumptions: $5,600,000 compounds at 7% annual growth over a 37-year period, net of a $372,159 distribution paid annually. Results shown are after-tax. Tax liability varies with type of investment -- typically tax-efficient and tax-deferred. This scenario assumes earnings taxed at capital gain rates. Normal Transaction is using the same assumptions as the above with the exception of a $631,800 beginning tax payment. This scenario makes certain assumptions in order to illustrate the important aspects of this program. These assumptions may not and are not intended to be representative of the situation that all sellers of real estate property face. The particular circumstances which prospective sellers face exert an effect on the outcome of this strategy and, in turn, influence whether it is suitable for a client to undertake. There may also be additional considerations not accounted for in this example that may further affect whether this plan is appropriate for a particular property seller. Therefore, prior to engaging in this transaction, it is necessary that the prospective participant review their tax situation with their tax advisor to ascertain if this type of program is right for them.

8. Deferred Sale Trust Step #1
We have EPT’s Legal Network attorney set up John and Patty’s Deferred Sale Trust
They choose their trustee who follows their instructions
(Can be a family member other than children unless they are co-TT’s)

9. Deferred Sale Trust Step #2
Complete asset retention in a tax deferred
transaction
Real Estate
Sale Price $8,000,000
Step #2
John and Patty transfer asset(s) to their Deferred Sale Trust before escrow closes
They choose their trustee who follows their instructions
(Can be a family member other than children)

10. Deferred Sale Trust $ Step #3
Real Estate
Sale Price $8,000,000 $
Step #3
The Deferred Sale Trust sells the real estate and there is no gain on the sale to the trust
Net Sale
Proceeds
$5,600,000
(Depreciation increases capital gain And is deferred)

11. Deferred Sale Trust $ Step #4
Real Estate
Sale Price $8,000,000 $
Step #4
Trust pays John and Patty (age:54 and 51) an annual income of $372,159 for years
Lifetime income can be increased or reduced depending on their goals and estate planning objectives

12. Income taxes due on a portion of annual income
Deferred Sale Trust
Real Estate
Sale Price $8,000,000
Annual Income Recap:
Tax Free Basis $ 74,799
Capital Gain $ 75,335
Ordinary $222,025
Total Income $372,159 $
IRS receives 100% of the tax due, but spreads it over the term of the contract.
Like an interest free loan from the IRS!
Step #5
John and Patty pay taxes: capital gains - $18,306 ordinary income (% set by their tax bracket)
Step #4
Income taxes due on a portion of annual income $

13. John & Patty’s Beneficiaries
Deferred Sale Trust
Real Estate $ $
Sale Price $8,000,000
Step #6
John and Patty deceased; total value of Trust transferred estate tax free to their heirs
Deceased
John & Patty’s Beneficiaries

14. Frequently Asked Questions
Can we use a portion of the proceeds to re-invest in real estate at a later time?
Yes
If I’m in escrow right now, can I still use a Deferred Sale Trust™?
Can we borrow from the Trust?

15. Deferred Sale Trust - Advantages
Income Tax Savings - When appreciated property is sold, the seller defers recognition of gain until receipt of payments
Estate Tax Savings - Removes transferred property and all future appreciation from the estate without use of gift or estate tax exemptions
Maintains Family Wealth - Maintains wealth within the family
Estate Liquidity - Converts an illiquid asset into monthly payments
Retirement - Provides a stream of income for retirement
Probate Avoidance - Avoids probate
Asset Protection - A DST may place the transferred property beyond the reach of potential creditors and litigants if the transferor retains no interest in the transferred property
Security - Asset must be transferred on an secured basis

16. Tax Planning Alternatives
Taxed Sale – pay the taxes
1031 Exchange
Defective Grantor Trust
CRT (Charitable Remainder Trust)
CLT (Charitable Lead Trust)
GRAT (Grantor Retained Annuity Trust)
ILIT (Irrevocable Life Insurance Trust)
It is important that your client discuss their unique circumstances with our tax attorneys to help them determine the best course of action. This service is provided at no cost to you.

17. How Is The Money In The Trust Invested?
Depending your client’s goals and objectives, we work with some of the largest financial institutions in the world to develop strategies for:
Asset Preservation
Tax Efficiency
Liquidity

18. The Deferred Sale Trust TM
Fill out the free tax-savings illustration form today and find out what the Deferred Sale Trust can do for your client.

19. DEFERRED SALES TRUST™ support@parsefinancial.com
Brought to you by Parse Financial Wealth Management
Bobby Kashani, CFP®
16520 Bake Pkwy Suite 105
Irvine, CA 92618
Office: (949)
Fax: (949)