Reproductive Options

Escrow in Surrogacy: Protecting Your Journey With Ethical Practices

Intended parent mother and surrogate at a medical visit

You may have seen the horror stories about escrow in surrogacy – agencies opting to handle the money themselves in lieu of working with an escrow company, money going missing, surrogates not receiving their promised pay on time – or at all, and more. 

But what does that mean? Today we’ll talk about what an escrow is, how to ensure your funds are secure when embarking on your surrogacy journey, and why you must make sure that your agency uses an outsourced escrow service. 

Embarking on a surrogacy journey is a profound and life-changing experience, and one of the crucial decisions intended parents and surrogates face is choosing the right escrow service. The escrow process plays a pivotal role in ensuring a smooth and secure financial transaction throughout the surrogacy arrangement, and keeping the process a stress-free experience. 

What is Escrow?

Whether you’re an Intended Parent or surrogate, you’ll hear the term “escrow fund”. It can sound technical, and if you haven’t taken out a mortgage then it may not be something you’ve heard of before.

In surrogacy, an escrow fund is essential – it is an account that is set up to hold the funds required to pay the surrogate. This guarantees that the intended parents have the ability to cover the cost, and can feel secure knowing it is taken care of – while also allowing the surrogate the comfort of knowing that the funds are in place from the get go. From here, an account manager will oversee the funds and distribute as determined by the contract – escrow must be held by an attorney or certified public accountant (CPA).  

This escrow account manager is the responsible party for making sure the agreed payments are in the account and that they get distributed promptly and appropriately. Without an escrow account, there would be no guarantee that the money would be available and ready for the surrogate.

Unfortunately, more and more agencies choose to forego escrow services – opting to manage the funds themselves. This is not an ethical choice – and puts the surrogates and intended parents at risk. That’s why Reproductive Options choose to be committed to high standards, and ethical values protecting surrogates and intended parents’ best interests. 

Why Is An Agency Handling Escrow Unethical? 

As mentioned, an agency is not able to hold escrow – only an attorney or CPA is legally able to. That means that when an agency handles the intended parents’ money, they are distributing the funds from an agency-owned account. While this might be easier, and cheaper for them – it opens the door to a range of security concerns and a huge risk of bias that no surrogate should accept. Below, we’ll walk through some of the reasons that this kind of situation can be problematic.

Potential for Bias:

  • The agency handling the funds may inadvertently introduce a perception of bias, as the agency becomes directly responsible for distributing the money. This could lead to concerns about impartiality, potentially affecting the trust between intended parents and surrogates. 

Co-Mingling & Loss of Funds:

Most importantly in this kind of set up, the intended parents’ funds are no longer their own. It’s common for agencies to place these ‘escrow’ funds in an account with either all of the agency’s funds in it, or an account with all of their clients’ funds in it. This unfortunately makes it a little too easy for funds to disappear, or to be assigned to the incorrect surrogate.

What’s The Benefit Of Using Escrow?

Now that we’ve discussed just some of the concerns relating to agencies handling the funds themselves, we’ll talk about why we strongly recommend surrogates seek an agency with ethical practices that outsource the fund handling to a certified escrow company. 

Risk Mitigation:

  • By outsourcing escrow services, surrogates can mitigate any risks associated with financial transactions. Professional escrow services implement robust security measures to safeguard funds, protecting the funds and ensuring you see every dime that you’re supposed to.

Expertise and Compliance:

  • Outsourced escrow services specialize in managing financial transactions related to surrogacy journeys. This means that they’re equipped with the necessary expertise to navigate the complex legal and regulatory landscape that surrounds surrogacy arrangements. This ensures that all financial transactions comply with the legal requirements, providing peace of mind to both intended parents and surrogates – meaning you can focus on your surrogacy journey knowing that your pay is compliant and on time.

Neutral Third-Party Facilitation:

  • An outsourced escrow service acts as a neutral third party, impartially facilitating financial transactions between the intended parents and surrogates. This impartiality fosters trust and transparency in the surrogacy process, meaning that you can be confident that the funds are being handled by a reliable and unbiased entity. 

Streamlined Financial Management:

  • Outsourced escrow services often offer advanced financial management tools and platforms, streamlining the payment process for all parties involved. This not only improves the efficiency, and ease of the journey for the surrogates, but also reduces the administrative burden on the surrogacy agency – meaning that we’re able to be focused on you from start to finish. 

Questions To Ask Your Agency

Unfortunately, it’s very common for surrogates to simply not know what kind of escrow situation is going to be used – and so when things go wrong, you can be left unsure of what to do. That’s why we want to arm surrogates with this knowledge, and recommend building this into your agency screening questions. Below are some of the questions that we would ask.

  1. What company do you use for escrow funds? 
  2. Who is responsible for the distribution of funds according to the contract?
  3. Does your escrow manager operate in compliance with HIPAA laws?
  4. Do the IPs pay the escrow company directly?

In the ever-evolving landscape of surrogacy, understanding what escrow is and why it’s important to choose an agency that ethically protects your funds is critical. Reproductive Options has our surrogates at the heart of everything we do – outsourcing all fund handling to a compliant, secure escrow service that can guarantee you receive the pay that you should. Don’t risk becoming another horror story – choose an agency that puts you first.

Get started on your journey today!

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