Wednesday, May 16, 2007

Clients Lose Millions With Qualified Intermediary

I got an alert on an article today from San Jose, CA. The subject was a Qualified Intermediary that somehow absconded with millions and millions of dollars in clients 1031 exchange funds.
Here is a link to the entire article:

http://www.mercurynews.com/ci_5898867?source=rss&nclick_check=1#recent_comm

These are people who have been in business for a long time. It seems almost impossible to believe this can happen, but it shows that you need to know what questions to ask before entrusting your funds to anyone. It comes back to- how do you know what to ask if you don’t know?

Shopping for the lowest cost QI is acceptable if you are comparing apples to apples. Here are some basic questions.

1. Is my money held in a separate account that you cannot access except for the exchange transaction?

2. Are you insured and bonded?

3. Do you pay interest on my money while you hold it?

4. What assurances do you have in writing that if something happens to your company my money is still intact and not accessible to you to secure loans directly?

5. If your doors close tomorrow, is my money protected and available to complete my transaction on schedule?

The article doesn’t say how the money was invested such that the owners could borrow against it or not have the funds segregated and able to be drained.

There are many great Qualified Intermediaries out there, but some bad apples as well.
Make sure to arm yourself with the knowledge that your proceeds are safe and that your exchange will not be disqualified with late payments or heaven forbid lost altogether by unscrupulous owners!

Paula Straub760-917-0858
savegainstax@gmail.com

Fill out a Qualification Questionnaire to see if you qualify to save capital gains tax.

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