What makes an escrow agent 'independent'?
An escrow agent is independent when it has no ownership, management or financial link to the surrogacy agency. It is a separate company, licensed on its own, holding money for the people who signed the escrow agreement: you, the intended parents, and your surrogate. The agency is not a party to the account and cannot move funds.
Independence is a structural test, not a promise. Ask four things:
- Ownership. Does any owner, officer or relative of the agency own part of the escrow company?
- Address and staff. Does the escrow company share an office, phone line or employees with the agency?
- Signing authority. Can anyone at the agency authorize a payment out of the account?
- Choice. Are you allowed to pick a different escrow company?
If the answer to the first three is no and the answer to the fourth is yes, the escrow agent is independent in the sense that matters. If the agency fails, your money is not in its account and not in the hands of a company it controls.
At Private Label Surrogacy, you fund an independent licensed escrow agent: $10,000 at match and the balance before medications start. You may choose your own escrow company. PLS has never held client funds, and it does not take a share of the escrow agent's fee. That is a policy, not a marketing line, and it is why PLS refers to independent professionals for escrow, legal work and psychological evaluation rather than employing them.
What does licensed and bonded mean, state by state?
A licensed escrow company holds a state escrow or trust license and is subject to examination, audit and bonding requirements set by that state. A bond is a form of financial guarantee: if the company mishandles funds, the bond provides a source of recovery, within its limits.
Escrow licensing varies by state, and some states do not license escrow companies at all. Counsel is confirming how licensing and bonding requirements apply to surrogacy escrow in the states where PLS families and surrogates most often live.
What that means for you in practice:
- Ask which state issued the license, and for the license number.
- Look the license up yourself on the regulator's website. Do not rely on a copy of a certificate sent by the agency.
- Ask for proof of the bond and its amount.
- Ask who audits the company, how often, and whether the most recent audit found any exceptions.
If an escrow company tells you its state does not require a license, that may be true. Ask what oversight it does have, and weigh the attorney trust account option described below.
How is the account opened and in whose name?
The account is opened after you match and before the gestational carrier agreement is signed. The steps:
- Escrow agreement. You and your surrogate sign an escrow agreement with the escrow company. It names you as depositors, names the surrogate as payee for her compensation and expenses, and sets out how instructions are given and changed.
- Account set-up. The escrow company opens a segregated account held for the parties, not pooled with the company's own operating funds. Ask for the name of the bank and the exact name on the account.
- First deposit. At PLS, you wire $10,000 at match. Wire to the escrow company's bank using instructions you confirm by phone with the escrow company directly, never from an emailed instruction alone.
- Full funding. You deposit the balance before the surrogate starts medications. Nothing medical starts until the agreement is signed and escrow is funded.
From that point the escrow company is the only party that can release money, and only on the instructions in your agreement.
How are disbursement instructions set and changed?
The payment schedule in your gestational carrier agreement becomes the escrow company's disbursement instructions. Each payment has a trigger: a documented event that releases it. Examples from the PLS compensation schedule:
- Medication start: $500.
- Embryo transfer: $1,000.
- Monthly allowance: $300.
- Base compensation: paid in monthly installments after a heartbeat is confirmed.
- Maternity clothing: $750, or $1,000 for multiples.
- Housekeeping: $90 per week from 32 weeks.
Compensation figures are pending confirmation with Nancy Block.
When a trigger happens, the escrow company receives documentation (a clinic confirmation, a receipt, a signed request) and releases the payment. You are notified of each disbursement. Payments are usually released within 3 to 5 business days of the trigger being documented; timing depends on the escrow company.
Instructions change only in writing, signed by the parties the escrow agreement names. A change in a payment amount or schedule usually also needs an amendment to the gestational carrier agreement, prepared by the attorneys. Neither the agency nor any single party should be able to change instructions alone.
What controls prevent misuse: segregation, dual approval, audit
Three controls do most of the work.
Segregation. Your funds sit in an account held for the parties, separate from the escrow company's own money and from other clients' money, or in a trust account with a ledger for each client. If the escrow company has debts, segregated funds are not its assets.
Dual approval. No single employee can send money out alone. One person prepares the disbursement against the instructions, a second approves it. That stops both error and theft by one person.
Audit. An outside party checks the books on a schedule, and the regulator can examine them. Ask when the last audit was and who did it.
The controls only protect you if you can see them working. That is why you should receive statements directly from the escrow company every month, and log into the account yourself. Read how to verify your escrow balance for a monthly checklist.
| Control | Why it matters | Question to ask |
|---|---|---|
| State license | Puts the company under a regulator with examination powers | "Which state licenses you, and what is the license number?" |
| Bond | Provides a source of recovery if funds are mishandled | "What is your bond amount, and can I see proof?" |
| Segregated account | Keeps your money out of the company's own assets | "Is our money held separately from your operating funds?" |
| Parties named on account | Shows the money is held for you and the surrogate, not the agency | "What is the exact account name, and at which bank?" |
| Monthly statements | Lets you see every deposit and disbursement | "Will you send statements to us directly, every month?" |
| Dual authorization | Stops one person from moving money alone | "How many people approve each disbursement?" |
| Audit | Gives an outside check on the books | "Who audits you, how often, and when was the last audit?" |
Escrow company vs attorney trust account: pros and cons
Some families hold surrogacy funds in an attorney's client trust account instead of with an escrow company. Attorney trust accounts, often called IOLTA accounts, are regulated by the state bar. The attorney has professional duties about how client money is held and accounted for.
Escrow company, pros: surrogacy escrow is its core business; it has systems for monthly statements, milestone payments and online access; it is usually separate from both sides' legal counsel.
Escrow company, cons: licensing and oversight vary by state; you need to check the license and bond yourself.
Attorney trust account, pros: bar regulation and professional discipline apply; the attorney already knows your agreement.
Attorney trust account, cons: the attorney represents one side, so ask how the surrogate's interests are protected; statements and online access may be less detailed; payments can depend on one office's availability.
Either can work. The questions are the same: who reconciles the account, how often you get statements, and whether you can see your balance without going through the agency.
What should the escrow agreement say?
Before you sign, your attorney should confirm the escrow agreement covers:
- Parties. You and the surrogate by name. The agency is not a party with authority over funds.
- Account. The bank, the account name and that funds are segregated.
- Deposits. The amounts and dates: at PLS, $10,000 at match and the balance before medications.
- Disbursement instructions. The payment schedule from the gestational carrier agreement, with the documentation required for each trigger.
- Changes. How instructions are amended, and who must sign.
- Statements. Monthly, sent directly to both parties, plus a notice for each disbursement.
- Disputes. What happens if the parties disagree about a payment.
- Closing. How the account is closed, the final accounting and how any balance is returned to you.
- Fees. What the escrow company charges. The escrow fee is paid by the intended parents as a third-party cost, typically $1,000 to $2,500 for the journey.
The escrow fee is part of the third-party costs that total $15,300 to $29,000 at PLS. See third-party costs and legal contracts for how escrow fits with the gestational carrier agreement, and the escrow overview for why PLS treats it as a front-page policy.
Sources
- SEEDS, Society for Ethics in Egg Donation and Surrogacy, of which Nancy Block, RN, is a former President.
- State escrow and trust licensing rules, pending review by counsel.
- State bar rules on attorney client trust (IOLTA) accounts, pending review by counsel.
- Private Label Surrogacy compensation schedule and escrow policy.