What if probate is not open by day 45 of the 1031 exchange?

Day 45 is set by regulation, and an unopened probate is not among the things that move it

Section 1031(a)(3) denies like-kind treatment to property not identified within 45 days of the transfer, and Reg. section 1.1031(k)-1(b)(2) counts that period from the day the relinquished property was transferred. Neither mentions the taxpayer's death, and neither lets a court or the IRS wait for a probate appointment.

The one published relief is section 17 of Rev. Proc. 2018-58, which postpones a day 45 or day 180 falling on or after a federally declared disaster "by 120 days or to the last day of the general disaster extension period", whichever is later, and only when an IRS news release invokes it. Its list of qualifying difficulties includes a party to the transaction being "killed, injured, or missing as a result of the federally declared disaster"; a death from any other cause is not on it. Whether any extension is ever available covers the rest of that ground.

So the question is whether anyone with authority can act before the deadline arrives. The general case is in what happens if the owner dies during a 1031 exchange; this page is about the collision between the court's calendar and day 45.

If the decedent already identified, the list stands and no one needs to sign by day 45

An identification is valid once it is "a written document signed by the taxpayer" and delivered to the intermediary or another party to the exchange within the period, under Reg. section 1.1031(k)-1(c)(2). The decedent was the taxpayer when it was signed, so the estate inherits it, and a representative appointed on day 60 can close on anything on that list.

Paragraph (c)(6) permits a revocation only "in a signed written document" sent before the period ends, so the estate cannot change the decedent's list after day 45 any more than the decedent could; changing the list after day 45 explains why. A representative appointed before day 45 may revoke and re-identify; one appointed after is stuck with the list as it stands.

Check the list for a Delaware statutory trust interest. Owners short of time often add one because it closes by subscription, and an estate with letters in hand can complete that purchase quickly, as how fast a DST can close describes. The interest is illiquid and its value can fall, so treat it as an investment decision, not only a deadline fix.

If no list exists, the fastest routes are an informal appointment or a special administrator

Uniform Probate Code states offer an informal appointment through the registrar without a hearing. Minnesota's section 524.3-307 requires the registrar to appoint a qualified applicant once "at least 120 hours have elapsed since the decedent's death", with a 30-day delay for nonresident decedents. Five days plus the time to assemble the application is far less than 45.

Where a will contest or a missing heir blocks a general appointment, section 524.3-614 lets the registrar appoint a special administrator "when necessary to protect the estate of a decedent prior to the appointment of a general personal representative", and lets the court act without notice "if an emergency exists". Under section 524.3-617 a court-appointed special administrator has the power of a general representative unless the order limits it, so the order should name the exchange expressly.

Once someone is appointed, section 524.3-701 gives "acts by the person appointed which are beneficial to the estate occurring prior to appointment" the same effect as later acts: a safety net for an identification signed a day or two early by the person the court then appoints, not a reason to skip the appointment. Whose signature counts is in who signs the exchange documents after the seller dies.

Worked timeline: a sale on March 2, a death on March 20 and letters on April 10

Hypothetical, with round dates. The owner closes the sale of a rental on March 2; day 45 is April 16 and day 180 is August 29. The owner dies on March 20 without having signed an identification. The family files an informal application on March 23; the registrar may appoint as early as March 25, and in this example letters issue on April 10.

The representative signs and delivers an identification on April 14, two days inside the period, naming two apartment buildings and a Delaware statutory trust interest. The 30-day restriction that section 524.3-711 places on an informally appointed representative selling or encumbering the decedent's real estate does not bite, because the relinquished property was already sold and buying replacement property is not on that restricted list.

Had the court not acted until April 20, the estate would have had an empty list on day 45 and a failed exchange. The intermediary's agreement under Reg. section 1.1031(k)-1(g)(6) then lets the money out after day 45, and the gain realized on March 2 is taxed as income in respect of a decedent when the estate receives it. Run the dates with the estate's attorney and CPA.

• March 2: relinquished property transferred; both periods start.
• March 25: earliest informal appointment under the 120-hour rule.
• April 16: day 45; a signed identification must have been delivered.
• August 29: day 180, or the due date of the return for the year of sale if earlier.

What a representative appointed after day 45 can still do

If the decedent's list exists, close on it. If it does not, the exchange has failed as a matter of law and the job becomes collecting the money and planning the tax; the estate reports the gain in the year it receives the proceeds, and the executor's exposure for distributing before paying it is in executor liability for the tax on a failed exchange.

Do not let an heir buy property in their own name to rescue the exchange: the heir is not the taxpayer, so the estate's gain is still taxed. Where probate will be slow for reasons visible early, the executor's guide sets out whether to finish the exchange at all.