Who signs the 1031 exchange documents after the seller dies?

The decedent's signing authority passed to a fiduciary, not to the heirs and not to the agent under a power of attorney

Every signature in a deferred exchange belongs to "the taxpayer". Reg. section 1.1031(k)-1(c)(2) says replacement property is identified "in a written document signed by the taxpayer", and the intermediary's agreement under paragraph (g)(4) is a written agreement "with the taxpayer". After a death, state probate law says who fills that role.

Under the Uniform Probate Code as enacted in Minnesota, section 524.3-701 provides that "the duties and powers of a personal representative commence upon appointment". Once appointed, section 524.3-711 gives the representative the same power over estate property that an absolute owner would have, without a court order, and section 524.3-715(6) lists the power to "manage, develop, improve, exchange, partition, change the character of, or abandon an estate asset".

Two people cannot sign, even with the family's blessing. The heirs are not the taxpayer until the estate distributes property to them. And the agent under the decedent's power of attorney lost authority at the death; Minnesota's section 523.08 says a durable power "terminates on the earliest to occur of the death of the principal" and the other listed events.

Letters of appointment, an EIN and Form 56 are what the intermediary and the IRS will ask for

A qualified intermediary will not take instructions from someone who cannot prove authority, so the first document is the court's letters testamentary or letters of administration. For an executor who acted a few days before the court did, the relation-back sentence in section 524.3-701 gives "acts by the person appointed which are beneficial to the estate occurring prior to appointment the same effect as those occurring thereafter". Do not plan on it; see what happens when probate is not open by day 45.

Publication 559 tells the personal representative that "the first action you should take" is to apply for an EIN for the estate, which goes on the intermediary's records and on the Form 1041 that will carry the estate's side of the exchange. The Instructions for Form 56 then require the fiduciary to notify the IRS of the relationship and to "attach to your Form 56 current letters testamentary or a court certificate as proof of your court appointment".

A revocable trust skips the court: the successor trustee signs the day the grantor dies

If the relinquished property was titled in the decedent's revocable living trust, there is nothing for the probate court to appoint. The successor trustee named in the instrument signs the identification, the assignment of the purchase contract and the replacement closing in the trust's name, and the intermediary will ask for a trustee certification and a death certificate rather than letters.

After death the trust becomes its own taxpayer with its own EIN unless the trustee and the executor elect under section 645 to treat it as part of the estate; which return then carries the exchange, and which due date caps the 180 days, is in the estate's Form 1041 due date and the exchange period. Whether to finish the exchange at all belongs to the executor's guide and what the executor can still do mid-exchange; this page is only about whose pen is valid.

Two signatures run against the clock: the identification and the assignment of the purchase contract

The identification must reach the intermediary or another party to the exchange before midnight on day 45, and Reg. section 1.1031(k)-1(c)(6) allows a revocation only "in a signed written document" sent before the same deadline. A valid list the decedent signed passes to the estate unchanged; an empty list needs the fiduciary's signature in time. Who must receive it is in who has to receive the identification notice.

The second time-sensitive signature is the assignment of the replacement purchase contract. Under paragraph (g)(4)(v) the intermediary is treated as acquiring the replacement only if the taxpayer's rights are assigned to it and "all parties to that agreement are notified in writing of the assignment on or before" the transfer date. The fiduciary signs that assignment as the estate or trust.

If the replacement on the list is a Delaware statutory trust interest, the fiduciary signs the subscription in the estate's or trust's name. Rev. Rul. 2004-86 treats a beneficial interest in the trust it describes as an exchangeable interest in the real estate, so the signature rules match a deed; the interest is illiquid and can lose value, which the fiduciary weighs under the standard discussed in DSTs for trustees.

What to send, and to whom, in the first ten days after the death

Send these in one package so the intermediary, the title company and the replacement seller work from the same file, and confirm the state-specific items with the estate's attorney, since your state's probate code may differ from the Minnesota text cited here.

• To the intermediary: the death certificate, letters or the trustee certification, the estate's or trust's EIN, and a note of who will sign from now on.
• To the IRS: Form 56 with the letters attached, and a separate Form 56 for a trust.
• To the title company and the replacement seller: the same proof of authority, plus the signed assignment of the purchase contract and the notice of assignment.
• To the estate's CPA: the exchange agreement, the identification letter and the closing statement, so day 45, day 180 and the return due date are fixed in writing.
• To the file: a short memo recording why the fiduciary is continuing the exchange.