How We Protect Your 1031 Exchange Funds

During a deferred 1031 exchange, your qualified intermediary holds your sale proceeds for up to 180 days. That can be the biggest check you ever trust to someone else. WealthBuilder 1031, an attorney-owned qualified intermediary founded in 2009, protects that money in seven ways.

Seven safeguards on every exchange

1. A separate account for your exchange

We open a separate account for your exchange, titled to WealthBuilder 1031 for your benefit and set up under your taxpayer ID number. Your money is never pooled with other clients' funds or with ours.

2. FDIC coverage sized for real estate

Standard FDIC insurance covers $250,000 per depositor, per bank, per ownership category. Many sales bring in far more. WealthBuilder 1031 holds exchange funds in accounts individually insured up to $240 million.

FDIC insurance protects deposits if a bank fails. It does not cover wire fraud, which is why safeguards 3 and 4 matter.

3. Dual authorization on every wire

One person drafts every outgoing wire and disbursement, and a second person must approve it. No single person can send your money anywhere. Our banking platform also requires multifactor sign-in.

4. Wire instructions checked by phone

Before we send anything, we call the closing agent to confirm the amount and the wire instructions.

Our own wiring instructions never change. If you ever get an email or call saying they have, don't act on it. Call us at 888-508-1901, not a number in the message.

5. Bonded and insured

WealthBuilder 1031 carries a $1 million fidelity bond and $1 million of errors-and-omissions insurance, on top of the FDIC coverage on your account.

6. Never invested

We never invest your exchange funds in securities. They stay in a bank deposit account with daily access, not a mutual fund or brokerage account.

7. You can see your account

You get view-only online access to your exchange account, plus an accounting after each deposit or disbursement.

Why we built these safeguards

Qualified intermediaries have failed before, and clients lost money. Three cases shaped how we work.

• LandAmerica 1031 Exchange Services (2008). The exchange arm of one of the country's largest title companies put client funds into auction-rate securities. That market froze, and the company filed for bankruptcy in November 2008 with client exchanges still in progress.
• The 1031 Tax Group (2007). Its owner, Edward Okun, misused about $126 million in client exchange funds. A federal court sentenced him to 100 years in prison.
• Southwest Exchange (2007). Its owner moved client money into his other businesses. Clients lost about $95 million, and a federal court sentenced him to 10 years in prison.

In each case, investors lost money they thought was being held safely for them. Many also owed tax on a sale they could not finish as an exchange.

The attorneys of Peterson Law Group formed our company in 2009, after we watched clients get hurt by the LandAmerica failure. Every safeguard on this page comes from that lesson.

Questions to ask any QI before you sign

• Will my money sit in its own account, under my taxpayer ID?
• How much FDIC coverage applies to my whole balance, not just the bank?
• Do you invest exchange funds, and in what?
• How many people must approve a wire or disbursement?
• What bond and insurance do you carry, and how much?
• How do you verify wire instructions?

Ask us. We're glad to walk you through every answer.

Start your exchange with your money protected

Call WealthBuilder 1031 at 888-508-1901 before your sale closes, or send us your details.

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What happens next: we call you back within one business hour (Mon–Fri, 8:30–5:30 Central). There's no cost to get your exchange started.