The Unspoken Truth: Why Trust Accounts should not be held by Agency Owners.
In the legal and financial industries, trust accounts have long been a cornerstone of professional responsibility. In the same manner, the surrogacy industry had always adopted the idea that trust accounts are necessary for a smooth journey. All the big agencies in Canada have always held money in escrow from Intended Parents for surrogates. However, in recent years, the use of trust has brought to light some incredible risky business. So let’s flip the script and talk about why Canadian Surrogacy Community has never held money on behalf of Intended Parents and why we never will.
The Rise and Fall of Trust Accounts
Trust accounts, also known as escrow accounts, were originally designed to provide a secure and transparent way for lawyers, accountants, and other professionals to hold client funds. The idea was simple: clients would deposit their funds into a trust account, and the professional would manage those funds according to the client’s instructions. This system was meant to protect both the client and the professional from potential disputes and mismanagement. In the surrogacy world, the same was assumed. The only fault of this idea was that surrogacy agencies were not financial professionals with the knowledge to safely ensure money was being handled properly. Agencies didn’t hire lawyers or accountants traditionally to make sure all funds were separately held. Trust accounts were just bank accounts agency owners owned. The individuals who started the agencies were just entrepreneurs who were asking IPs all over the world to send thousands upon thousands of dollars to drop in their accounts in the hopes that the tracking and math would add up at the end. If all services were provided by licensed accountants who have their own trust accounts, then perhaps it would be less of an issue. But agency fees would sky-rocket, because these professionals come with a hefty price tag.
Over time, trust accounts have become increasingly cumbersome and impractical and incredibly risky within surrogacy. With the advent of digital banking and online payment systems, the need for physical trust accounts has diminished. Moreover, the administrative burdens associated with managing trust accounts – including record-keeping, reporting, and compliance – have become a significant headache for professionals. So why do it at all?
The History of Canadian Surrogacy Community (CSC) and Trust Accounts
When I began to investigate how I wanted to set up CSC in 2016, it became clear that the industry standard was to have a trust account. But everything in my gut told me it was a bad idea – not just for my company, but for the IPs who trusted me to handle things. Why? Because at the time, I was just a woman who had this grand idea of helping people, but had the math IQ of Grade 10 general accounting. I was not qualified to be taking thousands of dollars and collecting receipts for multiple clients at one time. It would require a huge amount of time at my end and I was bound to make a mistake. Even with the best intentions, it was inevitable when one person is handling everything, that mistakes can happen. This is especially true when you are not an accountant.
The other major issue nagging at me was the court case of one major agency in Canada who was in big trouble for not properly handling trust accounts. This feeling of dread around the charges that were laid and the fines that were given wouldn’t go away. So I made a phone call to the lawyer in particular who defended this particular agency owner. I asked her one simple question, “How do I ensure I am not putting myself at risk that way this other agency did?” Her reply was equally simple. “Only take money from client’s who are specifically paying for a service you have provided. Trust accounts are not the expertise of agency owners. Don’t do it.”
And so I never offered trust accounts as part of my services. Instead I did something much more brilliant.
I created a program that was designed to bring Intended Parents and surrogates together in a unique bond of trust and mutual respect so that they didn’t need me to hold trust money. And nine years later CSC is still thriving on the concept of relationships come first and everything that follows can be worked out together.
The Drawbacks of Trust Accounts
So, what are some of the key drawbacks of trust accounts?
- Administrative Overhead: Managing trust accounts requires a significant amount of time and resources. Professionals must keep detailed records, comb through monthly receipts, and comply with complex regulations. This administrative burden can be a major distraction from core business activities and be costly if out-sourced.
- Limited Flexibility: Trust accounts are designed to hold specific funds for specific purposes. This rigidity can make it difficult for professionals to adapt to changing client needs or unexpected expenses.
- Security Concerns: Trust accounts are often held at traditional banks, which can be vulnerable to cyber attacks and other security breaches. This risk can be particularly concerning for professionals handling sensitive client information. There can also be a security breach within the agency itself. An employee who skims money off the top of trust accounts or an agency owner who creates a system to line their pockets with additional money that they can hide through fake receipts. IPs are vulnerable to never seeing receipts and never knowing where their money went and what the money was used for. In recent years there has been too many Canadian and USA agencies that have been accused of sinister activities in relation to trust money.
- Lack of Transparency: Trust accounts can create a lack of transparency around client funds. IPs do not have real-time access to their funds, and do not discuss expenses with their surrogate because the agency is responsible for dealing with it. It creates a massive crack in communication around one of the most important elements of supporting a surrogate. Expenses and money are part of the journey and if that makes people uncomfortable, they truly shouldn’t be doing surrogacy in the first place. There are far more uncomfortable events to come that will knock couples off their feet if the conversation of money is too difficult to discuss.
So, what’s replacing trust accounts for CSC?
A Relationship-Based Approach: IPs are asking a complete stranger to have a baby for them. Even after many years of surrogacy existing within Canada, it is far from mainstream. It is very much a crazy concept to a huge population still. So, let’s not pretend that anything with surrogacy is just so. If you can ask a woman half way across the globe to have your baby, and you can trust her to do that, why can’t you trust her to submit receipts and stay within a contractual budget every month? The question begs a real answer. It starts and finishes with fostering a healthy relationship and having the respect to talk to one another about the ups and downs. This includes a surrogate feeling comfortable with asking for what she needs during the pregnancy. She’s doing this for you, so don’t get too hung up on the idea of preserving every dollar you have. Every professional in the process gets paid to help you – except the surrogate. So if she wants to buy that big body pillow for sleeping, get a yoga membership, take a trip to the spa to relax, or enjoy the luxury of having a housekeeper once a week, then just let her. She’s growing your child. Great relationships in our program find their way through the expenses with our guidance. In nine years of running this program, I’ve never had a surrogate not receive her monthly expenses.
Get Comfortable with being Uncomfortable: Having tough conversations in the beginning includes talking about money. Stop making it taboo. Money makes the world go round. This is no different, even if your surrogate isn’t being paid outright. It’s still going to cost you to support her. So find a safe way to send her money every month and be the one to lead the conversations when you have questions about expenses. Ask her what she needs. Let her know you are happy to support her in being stress-free, healthy, and happy before, during, and after the pregnancy. Keep in mind, not having a trust account allows you control over knowing that your money is 100% being spent on your surrogate.
Conclusion
While most agencies in Canada still do trust accounts, and claim it is a vital part of their services, CSC has taken the strong stance since Day 1, that trust accounts are unnecessary if the right mindset and relationship is fostered from the beginning. This is why we have intake calls, screening, and many conversations about the principal foundation of CSC being relationship-driven. If Intended Parents want a business-like match with a woman, then we aren’t the program for them. Remember, in Canada it is altruistic. If surrogates aren’t doing this for money, then what is their motive? In my experience as a three-time surrogate, and owning a surrogacy agency for nine years, it is always about one thing – helping someone in need. So while they are helping you, make sure you take care of them. You don’t need me to take your $30,000 expense budget, dump it in my account, and hope your surrogate is getting everything she needs. Just take the reigns on providing for her, and let us stay in our lane and do what we do best. It’s all about roles and responsibilities. We are here to help in so many other ways. Trust accounts will never be part of our services provided. In a journey of so little control left for IPs, relish in the fact that you get to be the one to financially and emotionally support this amazing woman who’s entrusted you to take care of her.
M(Other) starring Angela