The 1031 exchange industry is largely unregulated, meaning that not all Qualified Intermediaries (QIs) are created equal. Your QI holds your exchange funds, often hundreds of thousands or even millions of dollars, so selecting a financially stable, trustworthy, and regulated partner is crucial.
What to Look for in a Qualified Intermediary
Here are some key elements to evaluate when choosing your QI:
- Regulatory Oversight: Unlike banks or trust companies, QIs are not regulated. Ensure your QI is regulated, independently audited, and adheres to internal controls. Exeter 1031 chose to be regulated (see below).
- Financial Stability: Look for strong regulatory-required equity capitalization, financial transparency, and professional liability coverage.
- Bonding and Insurance: Make sure the QI carries a financial institution blanket bond, fidelity bonds, errors and omissions (E&O) insurance, and cyber/wire fraud insurance.
- Use of Qualified Trust Accounts or Escrow Accounts: This structure ensures your funds remain safe and legally separate from the QI’s general assets.
How Exeter Ensures Client Safety
The Exeter Group goes above and beyond industry norms to secure your 1031 exchange funds:
- Exeter Trust Company is a licensed, regulated, and audited Wyoming-chartered trust company.
- We hold and safeguard clients’ 1031 exchange funds in separate, segregated, dual-signature Qualified Trust Accounts to protect your exchange assets.
- Our clients benefit from strong internal controls, annual regulatory exams, annual financial audits, and comprehensive insurance policies.
Want to learn more about Qualified Intermediaries? Read our article.
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