It’s tough out there right now. We are all trying to figure out the best way to weather the current economic storm, and stay ahead of our finances. Section 1031 is one of the oldest and most powerful provisions in our tax code. It is unfortunate that some taxpayers are nervous about utilizing this tool for fear of the security of their escrow money!
Since the tax code says that in order to effect a Section 1031 Exchange, the taxpayer cannot have constructive receipt of their funds, a Qualified Intermediary must be used.
Unless you fully understanding your Qualified Intermediary’s strategy in safeguarding your funds, you could be putting them at unnecessary risk. Edmund & Wheeler, Inc. suggests you have a clear understanding of how escrow funds are handled and ask prospective Qualified Intermediaries hard questions regarding their treatment of escrow funds.
The Exchange Security Program (ESP) has been developed by Edmund & Wheeler, Inc. of Franconia, NH, to provide peace of mind for those investors who wish to use Section 1031 of the US tax code to defer capital gains taxes when selling investment real estate or qualified personal property. Below is a synopsis of the program.
- We have been facilitating Exchanges since 1981. We specialize in Section 1031 as a consulting practice and not as a way to aggregate funds.
- We’ve facilitated thousands of Exchanges worth hundreds of millions, nationwide.
- First in the nation to segregate client’s Exchange funds using their own taxpayer ID.
- First in the nation to grant total control of the movement of funds to the client using an online banking authorization system.
- Does not, will not and has NEVER “invested” client funds, and does not have an “investment policy”.
- For 32 years not one dime of any client’s funds have been lost, misused, misplaced or “invested” into anything other than an FDIC insured money bank.
- Provide “best of class” consulting to ensure Section 1031 is the right strategy for the client.
- Properly insure our company with errors and omissions insurance that is sized correctly to protect our client’s funds. Click here to review.
- Maintain a Fidelity Bond issued by Travelers. Click here to review.
- Safeguard all client funds in a segregated bank account using client taxpayer ID numbers.
- Set up bank accounts so that client has full online access to the ledger of the account, 24/7.
- Set up bank accounts so that funds CANNOT be moved without client’s online approval.
- Our clients can rest assured that they have total control of their deposits (without constructive receipt) at all times.
1. Should you Exchange?
We provide unlimited pre-exchange support to make sure that your situation strictly meets all of the requirements of Section 1031. We will work with you and your trusted advisors in establishing that Section 1031 is indeed in your best interests. Our fees are earned by facilitating Section 1031 Exchanges, Section 1031 consulting, professional training and not aggregating funds for any other purpose.
2. When an Exchange is in your Best Interest
When it is determined that an Exchange is the best avenue, we create an Exchange Agreement. This Exchange Agreement will clearly indicate how your funds will be handled and safeguarded. There is no mystery here. Edmund & Wheeler deposits your funds into an FDIC insured money Bank.
3. How your funds are handled.
We deposit and transfer all funds only through wire transfer. We set up client accounts through our primary banking partner:
The segregated account is set up using the client’s taxpayer ID.
The client is granted online access to this account so that it can be monitored 24/7.
When funds are required for deposits, build-t0-suit disbursements, or funding replacement properties, Edmund & Wheeler sets up the funds transfer at the bank with all pertinent information.
The client then must log into the banking system, review the disbursement and then approve the transfer.
Money CANNOT leave the account without the electronic approval of the client.
4. What if something happens to Edmund & Wheeler, Inc.
Good question. Edmund & Wheeler has a 31 year track record of successful Exchanges. We have taken every available precaution within the statutes to safe-guard client funds. The fact that these funds are held in a segregated bank account in YOUR name and YOUR taxpayer ID goes a long way in ensuring that your funds will continue to be safe and accessible.
We have also built in safeguards with our board of directors so that no one member of the Edmund & Wheeler team is a weak link in the availability of your funds when you need them.
For 31 years Edmund & Wheeler has been New England’s most trusted Qualified Intermediary, but that simply isn’t enough anymore. Any Qualified Intermediary that wants you to work with them MUST have the processes in place to ensure that no matter what…your money is available to you when you need it.