What You Need to Consider When Choosing a 1031 Exchange Facilitator
1031 exchanges involve complicated processes, therefore, it is crucial to evaluate the exchange company you are considering before making your decision. Below are tips for selecting the best 1031 exchange facilitator.
When choosing a 1031 investment properties exchange accommodator, you need to ensure that they are qualified and have depth experience on how to process the transactions. 1031 exchanges come in many variations a good accommodator will be able to handle even the difficult exchanges. You can start by inquiring how many clients they have worked with in the past as well as exchange processes that they did and they have successful results. When you work with an experienced firm, you will have peace of mind because they will guarantee you quality services and help you understand the whole process.
You may want to ask for a list of references and delaware statutory trust in order to help you evaluate the experience and capability of the accommodator. Be sure to ask the references if they received satisfactory services form the facilitator and whether they would like to work with them again. With this information, you will be able to establish if they are right for you and your business.
Ask various exchange companies where they are going to hold your funds before you make any decision. Look for a firm that will provide you with options for holding and safeguarding your funds. It is advisable to ensure that your funds are held in a segregated qualified trust or in an escrow account which are safer than other accounts. If you are not given the opportunity to choose the bank of your choice, it is advisable that you look for another exchange accommodator.
It is prudent to choose an exchange accommodator who operates full-time rather than part-time. This is prudent so that they can be updated with the latest tax code changes and rulings and help you apply them to your situation.
Inquire if the company conducts background checks on its employees before hiring them to manage your exchange funds and assets. This will ensure that they only hire reputable employees who put the needs and interest of the client’s first. A good firm should provide you with internal controls which are policies that protect your funds from theft by employees.
Request for a copy of the insurance coverage and verify that the qualified intermediary has adequate fidelity bond insurance coverage. The firm should also have an insurance that protects you in case you are required to pay taxes arising for the firm’s negligence.
You should always evaluate the exchange company you are considering and ensure they have a good reputation in the market. You can also check if they have membership with any professional associations for facilitators as this shows that they are qualified to provide you with the most secure exchanges.