UPCOMING SEMINARS

October 15, 2008
Lebanon, OH

Introduction to
Section 1031 Exchanges

11 a.m.-12 noon
Warren County Common Pleas Court
(513) 695-1309

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October 29, 2008 Indianapolis, IN

Advanced Section 1031 Exchanges-Event# 45618

8:30 a.m.-4:40 p.m.
www.nbi-sems.com

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November 5, 2008
St. Louis, MO
(near Clayton, MO)

Advanced Section 1031 Exchanges-Event# 45201

8:30 a.m. - 4:40 p.m.
www.nbi-sems.com

Your Trusted
Section 1031 Advisor Newsletter

Where Can An Investor Turn to in Turbulent Financial Times?

The Problem:  The recent credit crisis has uncovered several issues of confidence or trust, which were either not generally known or discussed in choosing an Exchange Company.

Good business practice requires the Exchange Companies  to act at all times for the sole benefit and interests of their Exchange Clients.  In other words, Exchange Companies must not put their personal interests before their duty, and must not profit from their position as fiduciaries.

First:  Exchange Client Funds:  Protected by FDIC limit?  While Independent Exchange Companies can and do spread their deposits among many Banks to minimize the risk of deposit loss, based on the $250,000 FDIC limit, Bank  Exchange Companies do not deposit their Exchange funds with other Banks for the protection of their Exchange clients.  While this is the sensible and prudent course of action to protect the funds of their Exchange Clients, Banks in the Exchange Business do not do it.

Second:  Exchange Client Funds:  Protected from additional risks?  Under existing Exchange Rules, Bank Exchange Companies are permitted to regularly transfer their Exchange funds in and out of the Exchange Company (a subsidiary) to the Bank (Parent Corporation) to be used in the lending and investing operations of the Bank’s business.  This exposes the Bank's Exchange clients to additional investment risks.  This can be done without the knowledge of the Exchange client.

Third:  Exchange Client Funds:  Liquidity?  Independent privately owned Exchange Companies are required to separately account for and prudently invest all Exchange monies for their Exchange clients in order to provide for immediate liquidity.  In contrast, publicly traded Banks are permitted to transfer Exchange funds to the Parent Bank or other banking affiliates without the knowledge or consent of the Exchange client.

Fourth:  Exchange Client Funds:  Investment Risk?   It is well known within the Exchange Business that some Exchange Companies with hundreds of millions or billions of dollars of Exchange funds regularly invest their large pools of Exchange Funds in ladders of securities to maximize their investment earnings, without the knowledge or consent of their Exchange clients.  This is based on the assumption that there will always be more Exchange Proceeds available to provide liquidity.  However, in a period of time like the present, where the number of Exchanges has dropped off considerably, Exchange clients may be exposed to unknown investment risks.

The Solution:  When selecting an Exchange Company, the safety and security of the Exchange Funds should always be paramount.  Diversification of the Exchange funds is important.  This is done to ensure that either (1) no more than $250,000 is in any one account; or (2) additional FDIC coverage may be sought.  Choose an Independent Exchange Company that is capable of:  depositing your funds in as many separate Bank accounts as you desire, or depositing with an account that is eligible for additional FDIC insurance. 

Stephen L. Robison, Esq. is an independent exchange advisor, and is not associated with any banks.  He knows that it is easy to make mistakes and have to pay penalties and interest as well as taxes on a botched Exchange.  That is why Strategic Property Exchanges, LLC has an iron-clad service guarantee to protect our Customers from loss of Exchange Funds, Errors, Mistakes, Tax Penalties and Interest.  We prepare your tax forms, provide a Tax Opinion and guide your staff and Advisors through the entire process from start to finish. 

Let us Safeguard your Clients' Exchange Proceeds, Minimize their Taxes and Maximize their Cash.