Archive for July, 2020
July 8, 2020 | By: Liz
My good friends at Private Label Surrogacy recently asked me to help educate their prospective clients and gestational carriers about escrow agents. What is it that escrow agents do and why is it important?
Trust me that you don’t really want me to tell you the specific ins and outs of my day at Stork Escrow unless you want to fall asleep from boredom in the next few minutes. My life as an escrow agent “workin’ 9-5, what a way to make a livin’” (as Dolly sings it), is not the subject of this blog, nor should it be the subject of any blog because “it’s enough to drive you crazy if you let it”.
Fortunately for those reading this blog, it turns out the question was more general than asking about the specifics of what I do while I’m ‘waitin’ for the day my ship’ll come in.” Among other questions (which I will address in another part of this blog series), my friends at PLS wanted to know what the difference is between fund managers and escrow agents and when and why you need to hire one of us.
Well then, let me discuss “my service and devotion” . . . .
Nomenclature aside, escrow agents and fund managers are (or should be) the same thing: people or companies who are responsible for holding and distributing the money needed for surrogacy and egg donation arrangements. We exist to protect the people and the money involved in these third-party assisted reproduction arrangements.
In fact, I opened Stork Escrow with my partner Kelly DuMont to do just that: we “poured ourselves a cup of ambition” to protect the people involved in surrogacy and egg donation arrangements from financial harm. Kelly and I both had experience managing escrow accounts for third-party assisted reproduction and we had both heard some really sad stories of people losing their life savings from surrogacy and family building scams where money was stolen from the intended parents and the surrogate by people at the agency involved in the surrogacy arrangement. Kelly and I decided to work together to try and find a better way to protect people from getting hurt financially while they worked to build their dream family.
How escrow agents or fund managers achieve this goal—safeguarding the money and protecting people from getting hurt financially—is achieved in different ways and it’s sometimes dependent on state law. To some extent, where your surrogacy is going to take place may dictate some of the terms of your escrow arrangements.
California’s surrogacy statute, for example, has provisions pertaining to who can hold the funds and in what type of an account. If a licensed and bonded escrow agent is not used, California requires that funds be held in an “attorney trust account”. There are different types of attorney trust accounts that can be used but the bottom line is that these accounts are only available to attorneys and hold the attorneys to very high standards regarding the management of the funds. In contrast, some states require that independent or third-party escrow agents hold the money but don’t specify the type of bank account in which the funds must be held.
New York just passed new surrogacy legislation, the Child Parent Security Act (CPSA) which goes into effect in February of 2021. The CPSA requires that any party to a surrogacy arrangement deposit the money needed for the surrogacy with an independent escrow agent. New York feels that an independent third party provides necessary separation from the parties interested in the financial transactions involved in a surrogacy arrangement in order to protect everyone involved. In this context, the funds must be held by someone who has no relationship to the agency or to the people involved in the surrogacy arrangement.
Using an independent escrow agent prevents self-interest from interfering in the management of the money needed for the surrogacy journey. You don’t want it to be all “takin’ and no givin’” like that scam I mentioned. You want to know that no one is going to be taking your money except to give it to someone who legally is entitled to have it.
And that is really the answer. If you want to know what an escrow agent or fund manager is, what we’re supposed to do, and why we exist, that’s your reason: We are here to protect the money that the intended parents need to deposit to cover the surrogacy or egg donation expenses and we make sure it gets paid to the surrogate or egg donor in accordance with the terms of their respective contract. Call us whatever you want, escrow agent or fund manager, at the end of the day regardless of our name or title, our job is the same: to protect the financial interests of the parties to a gestational surrogacy or egg donation arrangement.
Third party assisted reproduction is a “rich man’s game, no matter what they call it”, and you may be using your life savings to make your family a reality. You want to know that you are not putting your money into “another man’s wallet”.
Why do you need an escrow agent or fund manager? “Well you’ve got dreams [s]he’ll never take away.”
Do all escrow providers offer the same fund security? What are the different types of accounts used to hold funds and does it matter what type you use? What are the most important questions to ask your surrogacy agency about escrow fund management?
Filed under: Egg Donation, Family Building Law, Financing Fertility Treament or Adoption, fund management in third-party assisted reproduction, Gestational Carrier, Gestational Carrier Arrangements, Infertility Awareness, New York Reproductive Law, Reproductive Law, Surrogacy, surrogacy escrow management, Surrogacy in New York, Third-Party Assisted Reproduction, Uncategorized