SECURITY OF EXCHANGE PROCEEDS

The 1031 Exchange industry has recently experienced several high profile cases in which qualified intermediaries have failed to provide exchange proceeds for their clients to purchase replacement property.  In each of these circumstances, the qualified intermediaries had pooled the exchange funds received from many taxpayers into a single commingled account for investment, over which the qualified intermediaries had complete control.  Unfortunately, the qualified intermediaries either misappropriated and lost exchange funds or failed to adequately secure the funds entrusted to them by taxpayers seeking to do 1031 exchanges. 

These events have naturally caused a great deal of concern among taxpayers as to the security of the exchange funds they may currently have with a qualified intermediary.  In order to assist taxpayers, we have provided a link on the right side of the page to a document with a list of items which a taxpayer, along with their tax advisor, should consider when selecting a qualified intermediary. 

Wachovia Bank, NA has a dedicated team of professionals to provide taxpayers with 1031 exchange services, and has served in the 1031 exchange industry for over 25 years.  In addition, Wachovia takes steps to preserve the security of the exchange proceeds, including:

• Wachovia Bank, NA is a regulated financial institution subject to federal and state regulations designed to insure the security and safety of deposits.
• Wachovia Bank, NA is the fourth-largest bank holding company in the United States with ratings of AA- from Standard & Poor's and Aa3 by Moody's Investor Service.
• The proceeds are held in segregated exchange accounts for each exchange.
• While many institutional qualified intermediaries operate their deferred exchange services as a subsidiary that isolates that function in an affiliate entity outside of a parent corporation, Wachovia Bank, NA serves as the qualified intermediary and the exchange proceeds are held as a direct deposit of Wachovia Bank, NA.
• Proceeds in the exchange account may be released from the account only on the instruction of the taxpayer and/or their advisor.

For more information about 1031 exchanges, contact Wachovia Exchange Services at (888) 693-5566.

Related Links

•Questions to Ask When Choosing a Qualified Intermediary 
•Wachovia Exchange Services Overview 

Corporate & Institutional Customer Service