Tips for Keeping Your 1031 Exchange Funds Safe & Sound

In a 1031 exchange it’s important that you don’t receive any of the sales proceeds of your relinquished property. But how do you rest easy knowing that your money is safe? In this article, we are going to offer a few tips for ensuring that your 1031 exchange funds are safe and sound.

Don’t Co-Mingle Funds

Don’t allow your funds to be co-mingled with any other taxpayer’s funds. Set up a separate, segregated escrow account for your 1031 exchange funds. Make sure that this account is only going to be used for your funds, and make sure you know the account number. Make sure that your funds are not co-mingled with your intermediary’s operating account. Knowing that your funds are in a separate, segregated bank account with no other funds will give you piece of mind.

Dual-Signature Account

Another way to further secure your funds is to lock your money down in a dual-signature account. This account would require two signatures in order to release any funds. The first required signature would be the qualified intermediary’s – since they are the primary holder of the account. The second authorization signature would be your own.

St. Paul 1031 Exchange Company

CPEC1031 has two decades of experience working on 1031 exchanges. Our qualified intermediaries can help you through each stage of your 1031 transaction – from the sale of your relinquished property to the acquisition of your replacement property. We bring to the table the skills and experience needed to ensure your transaction is a success. Contact us today to set up an appointment with one of our intermediaries and get started with your like-kind exchange today!

• Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2018 Copyright Jeffrey R. Peterson All Rights Reserved

Keeping Your 1031 Exchange Funds Secure

In this 1031 FAQ video, Jeff Peterson talks about how to keep your 1031 exchange funds safe and secure. Watch more 1031 educational videos here.

• Start Your 1031 Exchange: If you have questions about keeping your exchange funds secure, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved

How are my 1031 Exchange Funds Secured?

When you sell your relinquished property and the proceeds have gone off into cyberspace to some qualified intermediary’s account you may feel vulnerable. You may feel a hollow feeling in your stomach because you don't know where your money is or how it's being secured.

Safeguarding your Exchange Funds

How do you safeguard those funds in the interim between the sale of the relinquished property and the purchase of your new property? The way that I like to do it is to have the intermediary set up a separate segregated bank escrow account and have the title company that's closing your relinquished property wire transfer proceeds directly into that escrow account.

In addition to that I like to have the bank enter into a separate exchange escrow agreement between you and the intermediary that says the bank depository will not withdraw or allow anyone to access the funds without the intermediary’s written instruction and your co-authorization so the money is locked-down. You know exactly where your money is and you know exactly what the requirements are to get the money out, including your co-written authorization.

Qualified Intermediary Requirements

On top of those requirements it’s important to make sure that the intermediary has a Fidelity Bond, an errors and omissions policy, and it's a good idea that you are taking steps to prevent cyber fraud with password protected PDFs, encrypted emails, and data protection so your information isn't accessible to cyber criminals.  Always work with an experienced professional qualified intermediary company that has a long track record of providing safe, secure facilitation services. 

• Start Your Exchange: If you have questions about how 1031 exchange funds are secured, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2016 Copyright Jeffrey R. Peterson All Rights Reserved