Capital Gains Tax Solutions Podcast Deferred Sales Trust: What is the Worst-Case Scenario? (Risk & Control Explained)
12 snips
Jan 29, 2026 Dan Palmer, a Deferred Sales Trust practitioner, walks through trust mechanics and why an unrelated trustee is required. Hear clear takes on control vs taxable receipt, why sellers get a promissory note not cash, and the checks and balances that monitor trust funds. Listens cover worst-case audit outcomes, timing protections in contracts, and investment failure risks.
AI Snips
Chapters
Transcript
Episode notes
Relinquish Control To Defer Tax
- Do not expect unilateral control of proceeds if you want tax deferral; a third-party trustee is required for a valid Deferred Sales Trust.
- Relinquish control only to an unrelated trustee to avoid constructive receipt and immediate taxation.
Single-Entity Trusts Reduce Counterparty Risk
- Single-entity trusts prevent commingling and reduce counterparty risk compared with pooled 1031 arrangements.
- Having separate EINs, statements, and brokerage accounts provides transparency and stronger protections.
Add Independent Eyes On The Funds
- Monitor the trust actively and use independent professionals to add checks and balances.
- Engage a tax attorney, third-party tax preparer, and institutional broker so multiple parties review investments and reporting.