How a Qualified Intermediary can Help Financial Planners Collect Fees in a 1031 Exchange

Financial Planning Fees in a 1031 Exchange

Many financial planners don't want to collect a commission for their client’s purchase of a tenant-in-common or Delaware Statutory Trust property, but a fee instead. The 1031 qualified intermediary can be helpful in facilitating the payment of typical and customary transactional expenses during a 1031 exchange, which could include your fee for consulting and advising your client on the purchase of the property.

How a Qualified Intermediary Can Help

To accomplish this, you simply need to send to the intermediary your fee agreement that says that you're entitled to $50,000 (for example) for advising your client on the purchase of this asset, and the client's signature on that agreement.

Then what the qualified intermediary can do is prepare a disbursement request to authorize the transfer of the $50,000 transactional expense to the financial advisor, which is typically wired in conjunction with the other wire for the purchase of the replacement property interest.

So at the time of the closing, the intermediary sends one wire to the financial planner to pay them for their fees in conducting and advising the client and the other wire goes to the DST sponsor to pay for the property.

Customary Expenses

Typical and customary expenses can be paid for by the intermediary and if it's authorized in writing we have no problem whatsoever in facilitating the payment of commissions and flat advisory fees for your valuable service in helping the client find and close on an appropriate fractional interest in a property.

  • 1031 Hotline: If you have questions about collecting advisory fees in a 1031 transaction, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

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