Exchange/Escrow funds policy for your exchange account

Directrust 1031 exchange services has the responsibility of accounting for and protecting client funds during the period of the clients exchange, generally 180 days or less in duration. Therefore principal preservation and liquidity are of the highest priority for our clients and for Directrust and its reputation as a provider of section 1031 Exchange services.

Directrust will meet the “prudent investor standard” for its clients by exercising reasonable care and caution to protect the principal and liquidity of the investment.

It is the policy of Directrust to establish individual bank accounts for each client exchange. Only “qualified escrow accounts” as that term is defined under Treasury Regulation 1.1031(k)-1(g)(3) will be used for client funds. At no time, will client funds be co-mingled with other client funds or any Directrust operating funds.

Funds due to Directrust on client behalf will be in every possible case received by wire transfer directly to a pre-established bank account bearing the clients taxpayer identification number. Generally, a single financial institution will be utilized for this purpose. The safety and soundness of the institution will be highly scrutinized before the relationship is established and only well-capitalized institutions will be used. In addition, the institution’s ability to provide responsive personal service with a high degree of safety is necessary.

Upon notice of receipt, the client will be advised of the deposit. Funds will accrue interest daily and be posted daily to the benefit of the client unless other arrangements have been pre-arranged with the client and disclosed in the client’s exchange agreement.

All transfers of client funds will require the written authorization from the client. Funds cannot be moved from client accounts until a wire transfer is set up and approved by at least two members of the Directrust staff.
Clients who earn interest during the exchange period will receive a separate check for the interest earned. 1099 interest statements prepared by the financial institution will be forwarded to the client upon receipt at year end.