Surrogacy Escrow: How It Works and What to Ask Your Escrow Company
Most of the money in a surrogacy journey doesn't go straight from you to your surrogate. It goes through escrow: an account held by a third party that pays her compensation and expenses on the schedule in your agreement.
Escrow is easy to treat as a box to tick. But the escrow company you choose will hold a large share of your budget for a year or more. So it's worth understanding how it works, and asking a few pointed questions before you send any money.
Here's what escrow does, how money typically moves through it, and what to ask before you choose a company.
This article is general information, not legal or financial advice. Escrow arrangements depend on your agreement and on state law, so work with a reproductive attorney licensed where your surrogate lives.
What Does Escrow Actually Do?
An escrow company (or, in some journeys, an attorney's trust account) sits between you and your surrogate. You deposit funds. The escrow company pays out compensation, reimbursements, and other expenses according to the terms you both signed.
That setup protects everyone:
- Your surrogate knows the money for her compensation and expenses exists before she starts medications and carries a pregnancy.
- You know payments go out only for what the agreement covers, with a record of every disbursement.
- Your relationship stays out of money conversations. Neither of you has to ask the other for a payment or chase a reimbursement.
Professional bodies treat escrow as a core part of the agreement, not an afterthought. The American Society for Reproductive Medicine (ASRM) lists escrow arrangements among the central issues a gestational carrier agreement should address, alongside parentage, medical expenses, fees, and the allocation of risk.
Some states also write escrow into their surrogacy laws. New York's statute, for example, says that when an agreement pays the surrogate, funds for base compensation and reasonable anticipated expenses must be placed with an independent escrow agent before she begins any medical procedure beyond eligibility evaluations. Rules differ from state to state, which is one more reason to ask your attorney what applies to your journey.
How Does Money Move Through Escrow?
Every escrow company and every agreement is a little different, but the flow usually looks like this.
1. The Agreement Comes First
Your gestational carrier agreement sets the terms: base compensation, monthly allowances, reimbursable expenses, and when each is paid. Escrow follows those terms. If something isn't in the agreement, the escrow company usually has no basis to pay it, so read the payment sections closely with your attorney.
2. You Sign an Escrow Agreement
This is a separate contract with the escrow company (sometimes called a fund management agreement). It covers how deposits are held, who can approve payments, how fees are charged, and what happens to leftover funds at the end.
3. You Fund the Account
The escrow company tells you how much to deposit and when. Many journeys fund escrow before medications start, which ties into the legal clearance your clinic may want before the cycle begins. Ask your attorney and your clinic what they expect for your journey.
4. Payments Go Out on Schedule
Compensation is often paid in regular installments once a pregnancy is confirmed, and reimbursements are paid when your surrogate submits receipts. The escrow company should send you statements showing each payment.
5. Top-Ups and Closing Out
If the balance drops below what's needed for upcoming payments, the escrow company asks you to add funds. After the birth, once final expenses are paid, the account is reconciled and any remaining balance is handled according to your escrow agreement.
Why Does Independence Matter?
Escrow works because the money sits with someone who answers to the agreement, not to either of you, and not to any one professional on your team. When that independence breaks down, families can lose money.
In one federal case, the owner of three San Diego surrogacy consulting businesses admitted to stealing client funds. She submitted fraudulent payment requests to the escrow company holding her clients' money. She also told other clients their funds would go into escrow, then deposited them in her business checking account instead.
You don't need to assume the worst. But cases like this are why it's worth knowing exactly where your money is, who can move it, and how you'll see every transaction.
Questions to Ask Your Escrow Company
Bring these to your first call, and share the answers with your attorney.
About the Company
- How long have you handled surrogacy escrow, and roughly how many journeys do you manage at a time?
- Are you owned by, or financially connected to, an agency, a clinic, a law firm, or anyone else involved in my journey?
- Are you licensed or bonded, and in which state? Do you carry insurance that covers theft or employee fraud?
- Can you share references from intended parents or surrogates whose journeys you managed?
About Where the Money Sits
- At which bank are the funds held, and is it FDIC-insured?
- Is my money in an account of its own, or in a pooled account with sub-accounts for each client?
- How is the account titled, and do the bank's records show that the funds belong to me? The FDIC explains that money held by an agent for someone else can be insured to the actual owner, but only when the account and records meet specific requirements. Ask whether yours does.
- Does the account earn interest, and if so, who keeps it?
About Payments
- Who can request a payment, and who has to approve it? Can anyone other than you and your surrogate (or your attorneys) request a disbursement?
- How does my surrogate submit receipts for reimbursement, and how long do payments take?
- Will I get a statement for every transaction, and how often?
- Can I log in and see the balance and payment history myself?
- What happens if a payment is disputed?
About Fees and Endings
- What are your fees, and are they flat or tied to the account balance?
- Are there extra charges for wires, rush payments, or a second transfer?
- What happens to the account if the journey ends early or we need to rematch?
- How is the account closed out after the birth, and how long does that take?
Warning Signs
- Anyone asking you to send escrow money to a different account than the one named in your escrow agreement.
- Statements that arrive late, are vague, or come through someone other than the escrow company.
- Pressure to skip the separate escrow agreement, or to "keep it simple" with direct payments.
None of these prove something is wrong. They're reasons to pause, and to call your attorney before sending more money.
Escrow Is Also About Your Surrogate
Escrow keeps money out of your conversations with your surrogate, but only if it runs smoothly. Late reimbursements and unclear statements land on her first.
A few habits help:
- Fund on time, so she never has to ask whether the money is there.
- Agree on how reimbursements work before the first receipt, including what she submits and to whom.
- Keep the escrow company's contact details where you can both find them, so questions go straight to the right place. An app like Gest keeps your whole team's contacts in one place.
If you're going independent, escrow matters even more: there's no case manager to chase a late payment. Our guide to independent surrogacy covers where escrow fits in the order of steps. And if you're still building your budget, our surrogacy cost breakdown shows where escrow fits alongside legal, medical, and insurance costs.
Escrow isn't the most exciting part of your journey. But getting it right means one less thing to worry about, for you and for her.
Related reading:
Keep your escrow paperwork organized
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