Deferred Sales Trust Installment Planner

Forecast how a deferred sales trust spreads a large taxable gain into predictable income. Provide the trust corpus, the payout policy, and the installment term to surface annual distributions, recurring trustee fees, net spendable cash flow, and the capital gains exposure that continues to sit inside the trust until the balloon payoff.

Total gain you plan to roll into the deferred sales trust before deferring capital gains tax.
Percentage of trust principal you expect to distribute each year (enter 5 for 5%).
Number of years you will take interest-only installments before the principal balloon is due.
Optional — defaults to 23.8%. Adjust to reflect your combined federal and state capital gains rate.
Optional — defaults to 1.0%. Enter your expected blended annual trustee, custodian, and advisor fees.

Deferred sales trusts are sophisticated tax strategies. Coordinate with a qualified tax attorney and trustee before implementing a DST based on these projections.

Examples

  • Example 1 — A seller defers $2,000,000 of gain, elects a 5.00% payout, and stretches payments over 10 years with default tax and fee rates ⇒ Annual interest-only distribution: $100,000.00 | Estimated annual trustee and administration fees: $20,000.00 | Net annual cash flow: $80,000.00 | Total interest over 10 years: $1,000,000.00 | Deferred capital gains exposure: $476,000.00
  • Example 2 — A business owner contributes $850,000, targets a 6.00% payout for 15 years, and inputs a 20.00% tax rate with 1.25% in fees ⇒ Annual interest-only distribution: $51,000.00 | Estimated annual trustee and administration fees: $10,625.00 | Net annual cash flow: $40,375.00 | Total interest over 15 years: $765,000.00 | Deferred capital gains exposure: $170,000.00

FAQ

Can I model partial principal amortization?

This planner assumes an interest-only structure with a balloon principal return. To approximate amortization, reduce the taxable gain input to the remaining balance after each scheduled principal payout and rerun the calculation for each tranche.

How should I reflect investment performance inside the trust?

Adjust the payout rate to mirror the distribution strategy supported by your trustee and investment policy statement. Higher expected portfolio yields can translate into larger sustainable payout percentages.

Does the capital gains rate include state taxes?

Yes. Enter the combined federal and state effective rate you would owe if the gain were recognized immediately. When left blank, the planner uses a 23.80% baseline assumption.

What if my trustee charges a fixed dollar fee?

Convert the flat annual fee into a percentage of the trust balance by dividing the fee by the taxable gain amount, then enter that percentage in the optional fee field for a close approximation.

Additional Information

  • Payout rate is interpreted as an interest-only percentage applied to the deferred sales trust principal each year with no amortization.
  • Annual trustee fees default to 1.00% of assets under management unless you override the rate with your negotiated arrangement.
  • Deferred capital gains exposure reflects the original taxable gain that remains in the trust until you unwind the DST.
  • Total interest projection multiplies the annual distribution by the installment term without compounding investment earnings.
  • Outputs presume the principal balance is repaid as a balloon payment at the end of the installment window and exclude state-specific DST rules.

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