721 Exchange with Inheritor-Run REIT

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I am hoping to learn about any restrictions there might be related to a property owner (my parents) performing a 721 Exchange with a REIT that my siblings and I create. The goal here would be to separate my parents from the risks associated with expanding a rental portfolio. My parents have a small rental portfolio and have never utilized any leverage to expand it (e.g. cash out refi). They have planned to use the rental income for retirement. The REIT taking on debt would reduce the dividends they would otherwise receive - but the reduction in dividends would ideally be temporary.

This is still a very fresh idea but seems to offer many benefits to all members of the family, granted it could very likely become a full-time endeavor for myself. Would this even be legal? Thanks in advance for any advice, comments, or guidance regarding the legality/plausibility of this plan.