Escrow

A trust account or escrow account is a special form of the escrow account. An escrow account is basically an account opened in his own name but on behalf of another account. The owner of the escrow account managed this for the third party fiduciary.

Covert and overt trust accounts

A basic distinction between covert and overt escrow accounts. Concealed escrow accounts provide no indication of the fiduciary relationship. Open escrow accounts include a suffix to the account, which refers to the fiduciary relationship. This form of trust accounts in addition to the escrow account are also other open fiduciary accounts: individual as deposit passbooks or statutory, such as in the course of insolvency by the administrator managed accounts.

Legal treatment and regulations of the banks

While there are no specific legal rules for an ordinary escrow account balances fall on escrow accounts by the insolvency of the Trustee not in its pool of assets. According to § 47 of the Bankruptcy Act is a right to segregation of trust assets from the bankruptcy estate. The balances are therefore particularly protected.

For these special accounts Banking Conditions apply. It states in part: " These escrow accounts [ ... ] are not intended to serve its own purposes of the owner. " Even so it is made clear what purpose has a trust account. Furthermore, the bank has to ask for the beneficial owner and save.

Persons and application

Escrow accounts are generally performed by lawyers, notaries, accountants, tax advisors, but also pastors.

The lawyers' professional law sets strict standards on the treatment of foreign money. If the lawyer recognizes that he ( for whatever reason ) the foreign money can not forward, he must create a trust account and transfer the money on this. For smaller individual amounts also running a collection escrow account is allowed.

In real estate transactions can be contractually agreed that the purchase price initially by the buyer in escrow by the Trustee (usually a lawyer or notary ) is paid. This early loan payment ( value date ) for the purchase price settlement allows, as long as the mortgage is not yet registered. The Trustee shall bear the responsibility for the appropriate use of funds ( trust order ).

For the trust account a lift fee.