In today’s increasingly complex economic environment, greater opportunities arise for mismanagement and misuse of funds, fraud, or even theft. With such unprecedented levels of risk, it is crucial to work with a qualified intermediary (QI) that does more.
NES Financial was founded on the principle of delivering best practices. To help differentiate between outstanding and merely adequate QIs, we have compiled a list of these best practices. Before selecting a QI, make sure they follow all of these.
- Funds security. The security and accessibility of client funds are critical responsibilities of a qualified intermediary. Stringent measures are necessary to ensure funds security:
- 1031 Exchange funds are always held in qualified escrow or trust accounts
- QI is never on title to accounts holding clients’ exchange funds
- Any exchange funds movement requires dual approval by the client and the QI
- 1031 Exchange funds are never commingled with the QI’s operating funds
- 1031 Exchange funds are held with top-rated custodial banking partners
- Errors and omissions insurance coverage and a fidelity bond are provided for additional protection
- Transactional transparency. A 1031 exchange solution must provide clients with the utmost in transparency. By ensuring full access to transaction information, clients can be confident about the status and proper handling of their exchange.
- All account information is accessible in real-time from anywhere
- Advanced document creation, storage, and management applications for full audit and reporting capabilities are available
- Secure, password-protected web access is offered
- Standard or customized reports are generated automatically
- Regulatory compliance. To ensure compliance with federal and state tax laws, qualified intermediaries should submit to an annual audit of their business practices and technologies. Exceptional QIs voluntarily comply with:
- SSAE 16 SOC 1 Type II examination
- Sarbanes-Oxley 404 controls
- Gramm-Leach-Bliley Act
- The Bank Secrecy Act
- The USA PATRIOT Act
- IRC Section 1031 and IRC Section 468B
Before trusting your money with just any 1031 QI, make sure they follow these best practices to ensure higher chance of a successful exchange.
Allow us to address your business needs by contacting us. We look forward to hearing from you!