1031 Estate Planning Tips Video

In this 1031 FAQ video, Jeff Peterson offers a few 1031 exchange estate planning tips. Watch more 1031 educational videos here.

Video Transcript:

Many people that are getting up there in years are concerned about their estate planning as part of their 1031 exchange. Many people will own their old relinquished property in their own individual names but would prefer to take title to the replacement property as Trustees of their own revocable trust.

From the IRS’s perspective, when you take title to the replacement property as Trustee of your own revocable trust the IRS really doesn't make any distinction between John Doe individually and John Doe as Trustee of his own trust.

However, irrevocable trusts are a different and distinct animal and will not be viewed by the IRS as the same taxpayer, so we need to be very cautious as we do our estate planning as part of the 1031 exchange to make sure that we have the circuit completed. That the owner of the relinquished property either individually or as Trustee of the revocable trust receives title to the replacement property.

Thereafter, the taxpayer that completes the exchange needs to continue to hold their replacement property for investment or business purposes for a long and substantial period of time, which means that as soon as you complete the exchange it would not be prudent to start giving away interest in the replacement property because giving away the property would be antithetical or opposite of holding the property for the qualified purpose of investment or business purposes.

  • 1031 Hotline: If you have questions about 1031 estate planning, feel free to call me at 612-643-1031.

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