Are you considering a 1031 exchange and wondering who can give you the best advice regarding how this transaction will affect your heirs? While an Exchange Accommodator can give you important information, there’s another crucial facet you need to be aware of to successfully plan ahead and protect those who inherit your property. David Moore of Equity Advantage discusses the details.

Can an Exchange Accommodator tell me how an exchange will affect my heirs?

So I guess in response to the question, an Accommodator, Facilitator, Intermediary is not supposed to be giving tax or legal advice. We’re supposed to just be paid a fee to structure an exchange. The problem is that the Exchange Accommodator typically has firsthand knowledge of all these things and can explain them and is more familiar with them than the tax and legal people involved with a given transaction.

So, our policy is that we’re going to talk to our people, troubleshoot the transaction. If there’s something that’s going to be problematic, we want to get it back to our tax payers, and they can talk to their tax counsel about it. As far as the heirs, of course it’s going to impact the heirs. One of the things that has always been said about 1031s is that you could… an end game is swapping till you drop. So, instead of giving property to somebody that would ultimately be an heir and having them have the same low basis that the person granting the gift has, if you just swap till you drop, the heir’s are going to get a stepped up basis, current market value, at some point, on those properties and eliminate any actual tax consequence of a disposition if timing is done correctly. So, yes. It will impact heirs.

A second way it could impact heirs is an end game, is to exchange into multiple properties for kids, let’s say. So, often we’ll have somebody give up a larger property. They’ve got two or three kids. They’ll exchange into two or three different properties. Each one will ultimately be gifted over to the kids over time. So, certainly it’s a huge part of estate planning. It will impact the heirs. You need to talk to good confident tax people, legal people, in these transactions, and make sure your estate’s going where it needs to go. And 1031 is a huge part of that whole planning process.

Can An Exchange Accommodator Tell Me How An Exchange Will Affect My Heirs

What planning should I do for a 1031 Exchange?

Once again, it comes back to tax people. My advice to people on this is that an exchange should be discussed with tax people before it’s ever done, not have the first conversation with your tax people come tax return time. So, if there is something that’s going be problematic in a transaction, we will get the information out. We want you to talk to your tax people about it, make sure everyone’s on the same page, pre-April 15th, not way, way after the fact, maybe when an audit occurs. Certainly, tax planning. We’re just one member of a successful team of professionals, and that team’s going to certainly include good confidant tax and legal people to handle the estate planning, and make sure that things are done in a manner that everybody understands and can convey if it was ever questioned.

Please feel free to reach out with questions or concerns you might have. The only dumb question is the one you don’t ask.

The sooner you involve the team of professionals at Equity Advantage in your 1031 exchange, the better. They’re seasoned experts who know all the ins and outs of this complicated transaction. Call them at 503-635-1031 and protect your investments!