What is a 351 Exchange?
A 351 Exchange is a tax-efficient strategy that allows investors to transfer highly appreciated assets—such as individual stocks or separately managed accounts (SMAs)—into an Exchange-Traded Fund (ETF) without triggering immediate capital gains taxes. This strategy helps investors diversify their holdings while deferring taxes, maximizing long-term growth potential.
Why Consider a 351 Exchange?
Defer Capital Gains Taxes
Transition your appreciated stocks into a diversified ETF without triggering immediate taxes.
Enhance Estate Planning
ETFs simplify wealth transfer, providing a more seamless transition for heirs.
Diversify Your Portfolio
Move out of concentrated stock positions and into a professionally managed, tax-efficient ETF.
Increase Liquidity and Flexibility
ETFs provide daily liquidity and better transparency than private funds or direct stock holdings.
Maintain Market Exposure
Stay invested while optimizing your tax position for future gains.
How It Works
Transfer Assets:
Eligible assets are contributed to a newly formed ETF.
Receive ETF Shares:
Investors receive shares in the ETF proportional to their contributed assets.
Maintain Cost Basis:
The cost basis and holding period transfer over, deferring any tax liability until the ETF shares are sold.
Is a 351 Exchange Right for You?
If you’re holding appreciated stocks or an SMA and want to diversify tax-efficiently, a 351 Exchange could be a strategic move. Connect with us to explore your eligibility and the potential benefits.
