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Tax-Deferred Money Secure With Starker Services
As the largest independently-owned national Qualified Intermediary, Starker Services has been entrusted with tens of thousands of exchanges. All financial institutions used by Starker Services meet established and stringent standards. Regardless of which bank is used, written procedures require the following:
- Funds must be deposited in FDIC insured accounts or insured U.S. Treasury Funds.
- Every exchange is assigned an individual account number. Funds are never co-mingled.
- Starker Services carries a Fidelity Bond of $10,000,000 per occurrence to protect the Exchangor's funds. Click here to view the Bond Certificate.
- The signatures of two corporate officers are always required to move funds.
- The exchange agreement outlines the responsibilities of Starker Services to the client, as well as the client’s responsibilities to Starker Services.
During an exchange, you as the Exchangor cannot have receipt of the cash proceeds without paying taxes on cash received. Unfortunately, whether an exchangor has actual receipt or “constructive” receipt does not matter. It is still taxable. The dilemma facing investors is trying to satisfy the requirements of the §1031 Tax Code while obtaining maximum protection for the exchange funds.
Since no current standards exist within the industry, it is important to know how the Exchange Intermediary handles your funds. Starker Services holds the cash proceeds in a manner that provides Exchangors with the highest level of security, while complying with the requirements of the US Tax Code.
After closing on the sale of the Relinquished Property, the net proceeds are transferred to a special exchange account. This transfer of funds to a separate depository follows specific written instructions prearranged and approved by the Exchangor. One of the most important security devices is the financial stability of the institution where funds are held. Funds must be held in a bank that is both secure and familiar with correct procedures for tax deferral.
“Clients funds are put into separate savings account for each client’s exchange, “reports Jeff Whalen, Senior Vice President with Greater Bay Bancorp. With assets totaling over $8 billion, Greater Bay Bancorp is a very well capitalized bank by industry standards. Mr. Whalen further states, “Funds can only be removed from the Bank in two ways: 1) wiring to an escrow in favor of the Exchangor to purchase the replacement property; or 2) Wiring or sending a check to the Exchangor in the event the exchange is cancelled.”
Located in fiver different states including Michigan, California, Florida, Illinois and Texas, Comerica Bank has a long established relationship with Starker Services. Comerica, formed in 1849, is not only the oldest financial institutions, but also the 24th largest bank holding company in the United States with assets of $45 billion.” Starker Services, Inc. has numerous other banking relationships throughout the nation. If an Exchangor indicates a preference for a particular banking institution, Starker Services may coordinate with that bank to set up an exchange account. Custom Banking Solutions – If the Exchangor decides to open a custom account there will be a set up fee of $500.00 per account.
For more information on the security of funds in tax deferred exchanges, contact Starker Services, Inc. at 800-332-1031, Jerome Paciolla, Controller.
Click here for a list of Banks Starker uses.