The 1031 Exchange Institute

Welcome to The 1031 Exchange Institute™. The 1031 Exchange Institute is your complete online resource for 1031 exchange, 1033 exchange, 1034 exchange, 721 exchange, 453 installment sale and 121 exclusion information.  Information will also be provided regarding Self-Directed IRAs, including Traditional IRAs, ROTH IRAs, SEP-IRAs and SIMPLE IRAs. 

The 1031 Exchange Institute is dedicated to educating and informing real estate investors and their advisors on the benefits of 1031 tax-deferred exchanges and other tax deferred and tax exlcusion strategies so they can make better informed investment decisions.

Benefits of the Title Holding Trust or THT

A Title Holding Trust or THT gives taxpayers a number of important and distinct advantages when acquiring and holding real property whether for investment or as their primary residence. 

Confidentiallity of Property Ownership

The primary benefit of the Title Holding Trust is the fact that ownership of the property is completely private.  Beneficiaries are not disclosed under any circumstances unless the trust agreement authorizes the trustee to do so, it is required by law, or authorized by the beneficiary of the trust. Investors acquiring parcels of real estate probably do not want their identity made public. Real property owners may wish to rid themselves of unwanted solicitations. 

Ancillary Probate Avoided

California real estate owners resident in other states may avoid ancillary probate proceedings upon death if their California real estate is held in a Title Holding Trust. As such, the interest passes under probate or administration proceedings in the state where the deceased owner resided at the time of his/her death.

Conveying Title is as Easy as an Assignment

The Title Holding Trust Agreement can provide for a single or limited number of beneficiaries or their agents to control the power of direction to encumber or dispose of property. Because the interest under the trust is personal property, it is not necessary to have the spouse of a beneficiary join in the execution of a deed or trust deed. This feature may be advantageous where multiple beneficiaries are involved and are widely scattered or otherwise inconvenient to contact.

Transferring or Selling a Partial Interest

The beneficial interest in a Title Holding Trust can be easily transferred by an assignment of the beneficial interest without the formal requirements of a recorded deed. The trust continues for the benefit of the new beneficiary (owner). This technique is especially convenient when fractional interests are transferred between multiple beneficiaries or owners such as heirs.

The transfer or assignment of the beneficial interest in the Title Holding Trust also qualifies as a transfer or conveyance of the underlying real property interest and therefore qualifies as a transfer of real estate for 1031 exchange purposes.

Convenient Estate Planning Strategy

Lawyers and other financial and estate planning professionals can utilize the Title Holding Trust to accomplish many of the advantages of a living trust on behalf of their clients. This convenient and standardized estate planning vehicle can achieve privacy of ownership, probate avoidance, and succession of beneficial interests in the trust can be assigned to a donee pursuant to a gift program without fractionalizing the title of record to the real estate. This type of an estate reduction program is effective to utilize the annual gift tax exclusion and reduce federal estate taxes.

Collateral for a Loan or Line of Credit

The beneficial interest may be pledged as collateral for a loan or line of credit without the necessity of executing a trust deed or mortgage. This is accomplished by executing a collateral assignment to the lender. When the loan is paid off or the line of credit is terminated, the beneficial interest is  reassigned to the borrower.

Family Law/Divorce Settlements

Attorneys can use the title holding trust to retain control over a parcel of real estate during occupancy by a divorced spouse and/or dependent children. Valuable property can be retained by the parties as an investment, avoiding untimely sale. Their proportionate interests can be protected and set forth on the trust agreement.