Estate Planning With 1031 Like-Kind Exchanges and Delaware Statutory Trusts

A 1031 exchange or a DST can be significant estate planning tools if structured correctly. Taxpayers and heirs can benefit when properties are relinquished for like-kind assets in a 1031 exchange, or for DSTs, capital gains can potentially be deferred for decades.

Section 1031 of the U.S. Tax Code allows investment property owners to defer capital gains taxes and depreciation recapture by exchanging their relinquished asset for a "like-kind" replacement asset. Since you can invest the entire sales proceeds into a new asset, engaging in a 1031 exchange can allow you to "buy up," purchasing a replacement asset of higher value or better quality. This webinar will examine the structuring process and critical estate planning considerations related to like-kind exchanges.

DSTs also provide the deferral of capital gains taxes, but their structure and legal framework require a complete understanding of complex rules and regulations. A DST is a legal entity created under the laws of Delaware. DSTs hold income-producing properties and meet the 1031 exchange criteria for a like-kind replacement property. In addition, for estate planning purposes, investors in a DST have the ability to split their fractional interests in property held in the DST amongst heirs giving them an option to stay in the 1031 exchange cycle or cash out upon the liquidation of the DST.

Listen as our panel discusses the requirements of 1031 exchanges, structuring DSTs for certain transactions for estate planning purposes, tax basis, and other key items to ensure tax savings when integrating 1031 exchanges and DSTs in estate planning.

1. Overview of IRC Section 1031 like-kind property exchanges
2. Estate planning and 1031 exchanges
3. DST opportunities and legal pitfalls
4. DSTs and estate planning
5. Case studies and best practices for estate planners

The panel will discuss these and other key issues:

• What is the impact of 1031 exchanges and DSTs on estate planning?
• What are the unique transactional requirements for a 1031 like-kind exchange?
• What estate planning issues must be considered when structuring 1031 exchanges?
• What opportunities exist for using DSTs, and what are some of the legal pitfalls?
• What estate planning issues must be considered when structuring a DST?

Learning Objectives

After completing this course, you will be able to:

• Determine the tax consequences of a 1031 exchange
• Ascertain key estate and tax planning areas of focus when structuring 1031 exchange transactions
• Recognize the estate and tax planning challenges of DSTs
• Acquire methods to ensure tax benefits for utilizing 1031 exchanges and DSTs in estate planning

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business, law or public firm experience at mid-level within the organization, overseeing and structuring investment transactions in U.S. real estate; supervisory authority over other attorneys, preparers/accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability. Familiarity with fiduciary accounting income and different types of ownership entities and structures and related tax consequences for buyers and sellers of real estate.

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