If clients are worried about the solvency of the bank that’s holding their funds in a 1031 exchange, you want to look to the size of the bank that’s holding the money. There are some banks in the US that are considered too big to fail (in other words, the government would never allow them to fail). So the first thing you want to ask yourself is “am I holding the exchange funds in a bank that’s too big to fail?” Then there are other programs that will disburse deposits through programs that have participant banks in them so that your monies are disbursed so that you always have FDIC coverage because your deposit is disbursed through a network of banks, each bank holding up to the FDIC coverage amount, which is $250,000 per account holder. The logical next question is “what about the solvency of the banks in that network?” Even if you’re covered up to the FDIC amount, what if the bank goes under and it takes you a year to get your money from the FDIC? Use a big bank to hold your funds – a bank that’s too big to fail. And get your money redeployed as quickly as possible. You don’t have to stay in the exchange for the full 180 day period and the sooner you get your money back to work for you, the quicker you’ll have peace of mind.
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.
© 2023 Copyright Jeffrey R. Peterson All Rights Reserved