Are your 1031 exchange funds secure?
Many investors exchange their property through a tax deferred exchange know as a 1031 exchange. Funds from the sale of an asset may be rolled over into a new asset without triggering a taxable event. Many real estate investors use this tax advantage to grow their wealth. During an exchange the proceeds from the sale of the relinquished property are held by a qualified intermediary.
The bankruptcy in November of 2008, of LandAmerica 1031 Exchange Services, Inc. (“LES”) and its parent company, LandAmerica Financial Group, Inc. resulted in investor funds being held for exchanges to be subject to the bankruptcy estate. There was no affirmative trust relationship set up.
Could you imagine losing some or all of your investment funds held by your qualified intermediary? That’s a scary thought to me as a real estate investor who has exchanged into and out of properties.
Read more here:
http://www.apiexchange-enewz.com/www/enewz/newsletter.php?id=87&dm=1
http://www.lrlaw.com/news/xprPubDetailLR.aspx?xpST=PubDetail&pub=117
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