Brett Swarts is the Founder & CEO of Capital Gains Tax Solutions and the author of Building a Capital Gains Tax Exit Plan. He came through commercial real estate during the 2008 crash and now works with founders and their advisors on planning for a sale.
His starting point is that the team handling your tax returns may need additional expertise when you sell a company. He’s talking about bringing specialists alongside the existing CPA. A transaction that changes your entire balance sheet deserves a different level of preparation than another filing season.
I wanted to make the conversation concrete. If a founder sells for $10 million and uses a trust structure, who controls the money? What happens if the investments disappoint? And what if the founder needs a million dollars back?
Those are the questions I kept asking. The tax discussion matters, but I also want to understand the account, the payment terms, and the decisions someone else gets to make.
Here are the parts worth your time.
You can sell the company and become a lender
Brett describes a sequence in which the founder sells to a trust, the trust sells to the ultimate buyer, and the founder receives a promissory note. The trust holds the cash and owes the seller money.
That changes the founder’s position. The seller has a claim against the trust. It isn’t the same position as holding the proceeds directly in a personal account.
This is where I pushed on control. A founder who has spent years making every important decision is going to care about who gets to approve the next investment.
Brett acknowledges that some control is surrendered. In the version he describes, the client and the trustee both approve investments. He says his company can serve as the unrelated trustee.
My takeaway is that the approval process belongs near the beginning of the conversation. Before looking at where the money might be invested, understand the rights attached to the note, the role of the trustee, and what happens when the people involved disagree.
Flexibility means very little until you can explain who is allowed to do what.
A note rate does not settle the return question
We used a hypothetical $10 million exit, and Brett used a 10% note rate to make the income math easy to follow. That produces a stated annual amount of $1 million.
But writing an interest rate into an agreement does not cause the underlying investments to earn it. Brett says the example has no personal guarantee backing the obligation.
So I asked what happens if the assets produce less than the amount the note calls for. His answer, in the scenario where the arrangement is closed out with a shortfall, is that the seller receives less. He also describes extending the loan in other circumstances.
That distinction deserves more attention than the headline percentage. There’s the amount an agreement says is owed, and there’s the capital available to pay it. A tax strategy does not make those two numbers identical.
The 10% figure is an illustration. It isn’t a verified portfolio return or a promise that the founder can safely spend $1 million every year. I would evaluate the assets and payment terms with that distinction firmly in view.
A million dollars received is not a million to spend
I also asked about a founder who needs $1 million after the exit. Brett gives an example of scheduling a payment around closing and applying an assumed 40% tax rate. In that simplified illustration, the founder has $600,000 left after the assumed tax.
That example carries assumptions, including the earlier zero-basis setup. It should not become a universal rule about what a trust payment costs.
The useful point is the difference between the payment amount and the founder’s actual spending budget. A home purchase, a renovation, or the next business commitment needs to be funded with the latter.
Brett then adds another consideration: accrued interest can affect the character of later payments. The general installment-sale distinction is that interest is ordinarily taxable income, while principal payments can contain both gain and a return of basis. IRS installment-sale guidance explains that separation.
I’d want the payment schedule and the expected after-tax cash flow on the same page. Otherwise, a founder can be comfortable with the sale price and still be surprised by the amount available for the next decision.
Inheritance planning changes the lifetime cash-flow question
Brett also describes a second structure that he calls his 2.0 version. He frames it around estate planning and payments tied to life expectancy, with a different balance between taxes during the parents’ lives and the intended outcome for their children.
I asked him to put numbers around it and then to explain what happens when the parents die. That is a separate set of questions from how a founder accesses cash immediately after selling.
There’s an important source distinction here. Brett begins with a client-reported technology-company exit of roughly $70 million, then moves into a hypothetical billion-dollar scenario. The billion-dollar estate and associated tax figures are illustrations, not a documented client result.
His claims about estate-tax elimination and tax-free transfers depend on a structure the conversation does not fully document. I’d want the legal and tax analysis for that exact arrangement before treating those outcomes as established.
What the discussion does make clear is the planning tradeoff he wants founders to consider: lifetime flexibility and inheritance goals may call for different payment arrangements. A founder needs to understand both before choosing a structure because of one projected tax result.
An exit does not certify your investing ability
Near the end, Brett describes two entrepreneurial clients who had sold a business and wanted to keep building. According to his account, they left most of the capital in money market accounts while considering additional business and real estate opportunities.
The interesting part is the separation between ambition and immediate deployment. They wanted to do more deals. That did not mean they needed to put all the proceeds into the next available one.
Brett then makes a point I agree with: being good at running a business does not automatically make someone good at investing. I said in the conversation that there can be overlap, but capital allocation is a different skill.
The habits that help an owner move quickly inside a familiar business can be less useful when evaluating an unfamiliar investment. The founder may know the original company’s customers, margins, and operating risks in extraordinary detail. That knowledge does not transfer automatically to a new asset.
Knowing where your expertise ends is part of managing the proceeds. So is finding people who can support the decisions that come next.
Give the full episode a listen. Brett’s answers to the control, repayment, and cash-access questions give founders specific issues to work through with their own advisors before an exit.
- Sam Silverman
Silverman Capital
