Can I TRUST my QI...?

One of the things I used to tell my clients when I had my CPA practice is you never get ripped off by people you DON’T trust. What I mean is, after a high profile fraud case, you never hear the victims say, “I just KNEW he was going to rip me off!” Instead, the victim usually says something like “I can’t believe this happened," or, "I never saw it coming...."

Likeability is a good reason to do business with someone, but it’s not a good reason to trust them. Several high profile cases have made news across the country about Qualified Intermediaries (or “QIs”) either filing for bankruptcy, mismanaging client’s funds, or even disappearing all together (along with the exchanger’s money).

So, if you can’t trust the people you don’t trust, and you can’t trust the people you do, who do you trust? The answer, when it comes to your money, is simply: yourself. For years I’ve preached that you have to make sure that your 1031 intermediary places your money in a segregated account (and “segregated” means that only your money is in that account).

Ask for proof. You also need a way to be able to periodically check on the account and make sure the funds are not going anywhere it’s not supposed to go.

--The Experts