Escrow and Milestone Payments — Protecting Everyone

Escrow and milestone payments are financial safeguards used in surrogacy to ensure funds are available, released fairly, and compliant with state laws and contract terms.

They determine:

• Where money is held (neutral third-party escrow)
• When payments are released (clear medical or legal milestones)
• What changes based on state law (some states mandate escrow, others allow agency-managed accounts)
• How it protects everyone (avoids disputes, delays, and misunderstandings)

Upstream decisions—like choosing a state, timing contracts, or selecting an escrow provider—directly affect downstream results such as cash-flow needs, surrogate satisfaction, NICU planning, and legal compliance.

Who It Helps

Escrow structures support:

• Intended parents needing predictable budgets and reduced financial risk
• Surrogates, who rely on timely, guaranteed payments
• Agencies, who avoid acting as financial intermediaries
• Attorneys, who require proper documentation for court filings
• International intended parents, who need compliant money movement and proof of funds

Signals you may need stronger escrow/milestone planning:

• You’re delivering in a state with strict surrogacy regulations
• You need insurance reimbursements or NICU funds coordinated
• Your surrogate is out-of-state or uninsured
• You’re using donor gametes or complex medical protocols
• You want predictable monthly cash flow, not surprise fees

Step-by-Step

A simplified sequence that reduces risk and avoids payment disputes:

1. Choose an escrow provider (Weeks 0–2)

Look for licensed, surrogacy-experienced escrow companies with:

• Daily reconciliation
• Secure trust accounts
• Clear reporting portals
• Attorney oversight

2. Fund the escrow account (Weeks 2–4)

Intended parents deposit the agreed amount, usually:

• Full base compensation
• Anticipated medical expenses
• Agency fees
• Contingency reserves for complications or NICU

3. Align contract terms with milestone triggers (Weeks 4–6)

Examples:

• Contract signature
• Start of medications
• Embryo transfer
• Pregnancy confirmation
• Trimester payments
• Delivery and post-delivery reimbursements

4. Monthly reconciliations & real-time statements (Throughout pregnancy)

Ensures money is correctly tracked, disputes are minimized, and reimbursements are processed quickly.

5. Final releases & post-birth wrap-up

Funds for:

• Delivery reimbursements
• Lost wages
• Bed rest
• Childcare
• Travel
• Postpartum care
  Remaining funds are returned to the intended parents.

Pros & Cons

Pros

• Protects both surrogate and intended parents
• Eliminates awkward money conversations
• Creates predictable budgeting
• Complies with state laws and legal filings
• Prevents fraud, delays, and misunderstandings

Cons

• Escrow management fees add small costs
• Requires early funding, impacting cash flow
• Delays can occur if providers are slow to verify receipts
• Not all providers are equally regulated across states

Costs & Logistics

Key financial elements that affect planning:

• Escrow setup fee: $500–$1,500
• Monthly management fee: $50–$150
• Surrogate base compensation schedule
• Insurance premiums & deductibles
• Clinic invoices & medication costs
• Travel reimbursements
• Bed rest and lost wages
• NICU or medically complex reimbursements

Cash-flow planning tips:

• Fully fund escrow early to prevent transfer delays
• Track expenditures in real time using the escrow portal
• Budget for unpredictable events (e.g., preterm delivery, bed rest, NICU stays)
• Ensure insurance approvals before triggering payments

What Improves Outcomes

Actions that materially improve results:

• Use a licensed, independent escrow company (not an agency-controlled account)
• Align your contract and escrow schedule to avoid mismatched expectations
• Pre-fund major expenses before embryo transfer
• Coordinate attorney, clinic, and escrow timelines
• Request weekly or monthly ledger summaries
• Ensure insurance policies are reviewed before large payouts

Actions that rarely help:

• Micromanaging small reimbursements
• Paying the surrogate directly
• Using informal payment apps (Venmo, Zelle, etc.)
• Splitting funds between multiple accounts

Case Study

Scenario:
A couple working with an out-of-state surrogate wanted predictable budgeting and no risk of surprise fees.

Problems:

• Past IVF cycles had unexpected medication costs
• The surrogate had travel-related reimbursements
• The baby was considered high-risk, raising NICU concerns

Solution:

• A licensed escrow provider created a milestone-based release schedule tied to clinical events
• All travel reimbursements were routed through escrow with 48-hour review
• Extra NICU contingency funds were added but only released with hospital verification
• Weekly ledger statements kept everyone aligned

Outcome:
Clear expectations, no financial disputes, and smooth coordination with hospital billing at delivery.

Mistakes to Avoid

• Underfunding the escrow at the start
• Allowing agencies to manage the money without independent oversight
• Ignoring state-specific escrow rules
• Not requiring receipts for reimbursements
• Relying on verbal agreements instead of written milestone triggers
• Making off-ledger payments that cause confusion later
• Delaying funding until late in the process (can cause contract delays)

FAQs

Q. Is escrow required in all surrogacy states?

Ans : No—some mandate it, others simply recommend it. Your attorney determines what applies.

Q. Who controls the escrow account?

Ans : An independent, licensed provider—not the agency or surrogate.

Q. Can intended parents see every transaction?

Ans : Yes. Reputable escrow companies provide real-time statements.

Q. What happens if the journey ends early (e.g., no pregnancy)?

Ans : Unspent funds are returned after all invoices are reconciled.

Q. How do we plan for NICU or complications?

Ans : Add a contingency reserve and clarify hospital billing procedures in the contract.

Q. Can I pay the surrogate directly?

Ans : Generally no—direct payments undermine documentation and can cause legal issues.

Next Steps

• Free 15-min nurse consult
• Upload labs for a personalized pathway
• Get a state-specific cost breakdown for your surrogacy case

Related Links

• Legal ethics surrogacy
• Intended Parents
• Become a Surrogate
• Fixed‑Cost Packages
• SART
• CDC ART
• ASRM