April 28, 2025

Whether you’re planning a business sale or already closed the deal, here’s how to reduce taxes and compound your wealth—starting now.

Step One: Pre-Sale Planning with a South Dakota Non-Grantor Trust

If you’re still in the planning phase of your business sale, you’re in a unique position to make a dramatic impact on future tax exposure and estate planning outcomes—especially if you live in a high-income-tax state.

One of the most effective—but often overlooked—tools is the South Dakota non-grantor trust. Here’s how it works:

• Transfer business interests to a trust before the sale closes
• The trust becomes the seller and recognizes the gain
• South Dakota (a no-income-tax state) does not tax capital gains
• You may be able to remove the value from your estate for estate tax purposes
• If structured properly, you can still retain access to the proceeds via distributions or lending provisions

This strategy can reduce state income tax, federal estate tax, or both—depending on how it’s structured.

Learn more about South Dakota trust planning.
Explore estate tax strategies for business owners.

The key is timing: the trust must own the business interest before a binding agreement to sell is in place. That’s why early coordination with your advisors is critical.

Step Two: Post-Sale Wealth Management with a Tax-Aware Strategy

If the transaction has already closed, you’re now focused on how to invest your liquidity wisely—and tax efficiently.

Many investors default to passively managed portfolios or traditional direct indexing. But there’s a more advanced option: a tax-aware long/short equity strategy similar to what’s found in AQR’s Flex SMA.

Key Benefits:

• Offset gains from the sale with first-year capital losses
• Stay fully invested in a diversified portfolio
• Seek pre-tax outperformance via active management
• Harvest losses and defer gains for ongoing tax efficiency
• Customize for liquidity, risk tolerance, and charitable giving

The Power of Coordinated Planning

Both strategies—pre-sale trust planning and post-sale tax-aware investing—are powerful independently. When used together, they offer a comprehensive framework for:

✅ Minimizing income and estate taxes
✅ Aligning investments with long-term goals
✅ Enhancing multigenerational wealth preservation

These are complex planning tools that should only be implemented through careful coordination between attorneys, CPAs, investment advisors, and financial planners. Ideally, this happens within one team—or with an advisor who can quarterback the process.

Let’s Talk Before (or After) the Deal Closes

At Omni 360 Advisors and Omni Wealth, we work with business owners before and after liquidity events to develop strategies that are strategic, tax-aware, and forward-thinking.

If you’re considering a sale—or have recently completed one—connect with us. We’ll help you evaluate which combination of tools best suits your goals and timeline.

Contact us today to explore how South Dakota trusts, tax-aware investing, and smart coordination can help turn your liquidity into lasting legacy.

Schedule a free consultation | Explore our integrated planning approach.

Frequently Asked Questions

Q: What is a South Dakota non-grantor trust, and why is it used before a business sale?
A: It’s a trust established in South Dakota (a no-income-tax state) that can own business interests before a sale. If structured properly, it allows the trust—not the individual—to recognize capital gains, potentially avoiding state income taxes and reducing estate taxes.

Q: Can I still benefit from a strategy like this after the business sale closes?
A: Yes. Post-sale, you can use a tax-aware long/short investment strategy to offset gains, stay invested, and potentially improve your after-tax wealth outcomes over time.

Q: Are these strategies legal and compliant?
A: Yes, when implemented correctly and in accordance with state and federal tax law. That’s why it’s critical to work with an integrated team of qualified professionals.

Q: Is it too late to do any planning if my business sale is already closed?
A: Not at all. While pre-sale planning has unique benefits, post-transaction strategies can still significantly improve your long-term financial picture.