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Whether you are going through a Real Estate Transaction or a Comercial Transaction it is always good to trust your money with an Escrow Agent, also know as a paymaster.
A paymaster is a person appointed by a group of investors, or by the government, to dispense commissions, fees, or salaries within the private or public sector. Paymasters often receive fees by buyers in a large transaction, and disburse the funds to sellers and brokers on the transaction. Once the funds are received by the Paymaster, the funds are then deposited in a trust account established under Florida Law, for the purpose of holding funds on behalf of a principal or some other person until the consummation or termination of a transaction.
Although not required, most paymasters are attorneys, in which case are called “attorney paymaster”. The “attorney paymaster” serves as an escrow agent when supervising the funds. When it comes to commission payments from contracts dealing with extensive amounts of money, such as gold, steel, iron, gas, oil, among others, most banks in the United States are very cautious in handling distributions when the transaction involves a lot of money, and most parties to a transaction rather not have only one of them handle all the distributions.
For such reason, buyers and sellers involved in these types of transactions prefer placing the money with a neutral third party so that this person handles the disbursements. In these cases, buyers and sellers normally require a paymaster to be designated in order to handle the incoming and outgoing funds. By utilizing the services of an Attorney Paymaster, an individual or corporation can rest assured that their money will be received and disbursed by a neutral third party.
Every Attorney is regulated by the Supreme Court of the State where the attorney is admitted, and compliance with regulations regarding the practice of Law are enforced through that state’s Bar. An attorney’s Trust Account is a special account which is monitored by the state bar to ensure the attorney, or any other person, does not abuse the account. As well, such accounts are not limited by the $250,000.00 FDIC Insurance.
As a licensed attorney, the Attorney Paymaster would be subject to discipline or disbarment if any of the funds were misappropriated from an Attorney Trust Account. Therefore most people prefer that the paymaster be a licensed attorney, giving them an extra protection that their money will be distributed as per the terms of the Contract.
Once the services of a paymaster are contracted there are a series of steps that must be followed.
The paymaster will provide the corresponding information for the trust account that will be utilized. The necessary tax forms and client information will have to be completed by every recipient in the transaction. All Beneficiaries, Residents of the United States, will complete the W-9 tax form, while any person who does not reside in the United States will have to complete the W-8BEN form. These documents will not have to be completed until the funds are ready to be wired to the attorney’s trust account.
A copy of the Master Fee Agreement or any documentation that can demonstrate the source of the funds will also need to be received before the transfer, in order to comply with all Federal and State Laws.
Using the services of an ‘attorney paymaster’ provides a level of protection when dealing with transactions involving large sums of money. Our attorneys handling the paymaster services are licensed attorneys by the Supreme Court of Florida and the Supreme Court of Puerto Rico to practice law in the state of Florida and Commonwealth of Puerto Rico. Therefore, our attorneys are subject to the strict regulations and discipline of The Florida Bar in order to practice law in the state. Nevertheless, you can be sure that a law firm such as ours follows all the ethical rules that govern our profession and will provide the necessary services for our clients.