1031 Exchange Estate Planning - Co-Investing with Heir

[Keith Meyer]

Does anyone know how TIC's affect 1031 exchange inheritance rules? Specifically if an heir was looking to co-invest with their parents in a 1031 exchange property, typically this would screw up the estate inheritance process and the stepping up of the tax basis to market value upon the passing of the parents.

In the situation where the parents are exchanging into a TIC in the replacement property, this seems to be a different situation since it's actually the parents LLC which is taking title to real property via the TIC, so if an heir was to invest in the property as an LP I feel the IRS may view this differently but am not sure. Any input from those who have faced a similar situation would be appreciated!