What is and why is there unclaimed money?
Unclaimed Money or Property encompasses any financial obligation that is due and owed to another party (customer, vendor, employee, contributor, etc.). The key rule to remember is that this property never becomes the organization’s property – it always belongs to the person or entity owed. Unfortunately, many organizations do not realize that un cashed checks, escrow balances, customer deposits, mysterious credits, and unclaimed payroll and insurance benefits qualify as unclaimed property. These organizations are often referred to as the Holder of the abandoned money or property.
1. Once the abandoned money or property is remitted to [escheated] to the State in which the Owner was last known to have resided the “dormancy period” for that type of abandoned property has expired. The typical dormancy periods in most States of three to five years that means that an organization can only keep these items on their books and retain the associated funds for this period of time and then it must escheat / remit the funds to the appropriate State. Once the abandoned money reaches the State, the money or property is called referred to as unclaimed money or property.
2. An issue can be that can have his abandoned money or property escheated to a State in which the Owner has never lived. If the Holder of the abandoned money or property is headquarters in a different State, the abandoned money will be escheated / remitted to that State. For example many large publicly traded Companies with office or branches throughout the country are headquartered in a State such as Delaware.
3. Unfortunately, the laws governing the unclaimed money are both complex and vary from State to State. Complex for both the Owner of the unclaimed money and the Holder of the abandoned money. The challenge with regard to unclaimed property laws is that they are complex. Each state has its own set of laws. Even if you only have property to report to one state, many states require the filing of “negative” reports, meaning it is your obligation as an organization to tell them you have nothing to report. But you very likely have liability to more than one state, each with its own dormancy periods and rules on how to report each of the more than 100 different property types that can become classified as unclaimed property.
4. The format of the State’s unclaimed money database also varies widely:
• The fields of information or data points are varies and not consistent; many States by law cannot display the actual dollar amount
• If a dollar amount is displayed and the amount is “$0.00” or “unknown”, that does NOT mean that there is no unclaimed money but rather the unclaimed property cannot valued. Examples would be if the unclaimed property is stock(s) or a Bond whose value can change daily. IF the State has not yet sold the stock(s) or Bond. Another example would be jewelry or precious coins found in an abandoned Bank Safety Deposit Box. Its value is moot and cannot be accurately valued.
5. One needs to be savvy while searching for possible unclaimed money or property;
• Check any State in which one has resided
• Women should check both maiden, married and divorced last names
• Never use a single apostrophe. i.e.) if last name is O’Brian, the last name search would be O’Brian.
• A search for a Business unclaimed money must be the Company’s exact name:
• The Auto Glass Co. not Auto Glass Company
• A & B Company not A and B Company
• Check the common varies spellings of specific last names as:
• Thompson, Thomson
• Smith, Smyth
• Robertson, Robinson
• Schmidt, Schmid, Schmit, Schmitt
• Barry, Berry
• O’Brian, O’Brien
6. Some States do not list the unclaimed money in their public database until 2 years after the lost property has been escheated to them. Most States’ Unclaimed Property Divisions are understaffed so updating their databases can be belated. So keep checking regularly and frequently.
7. States are meant to be the Custodians of the unclaimed property that means that they honor the Owner’s or Claimant’s or his heirs to claim the unclaimed asset for perpetuity. However, a few States have quietly passed laws by which if the unclaimed property is not claimed in 10 years, the property is reverted to the State as its property. Indiana is one of these States.
8. Although non-compliance was largely ignored in past years, the growth of state budget deficits led by the current economic downturn has brought the issue to the front burner.While most states have departments committed to returning unclaimed property to the actual owner, less than 30 percent on average is ever returned, (therefore 70%+ remain current/active) which allows cash-strapped states to use the money they collect as unclaimed property to fund various public interest projects. The remainder is placed in a small reserve fund from which owner claims are paid. Therefore, unclaimed property represents, in essence, a “quiet” source of revenue that does not require the government to raise taxes. As a result, state enforcement efforts have steadily grown and audits to drive compliance are at an all-time high.
9. Real estate, cars, boats, fixtures and even animals that may be abandoned but are not generally applicable to the unclaimed property statutes and are neither transferred to nor held in State’s Unclaimed Property Division. The only tangible property that is transferred to the States are the contents of a financial institution’s safe deposit box when the safe deposit box has been abandoned.
10. States aren’t the only ones holding onto unclaimed property. Many Federal Government unclaimed money or property are:
• Federal Income Tax refunds
• FHA Mortgage Insurance premium refunds
• FDIC for failed Banks
• Unclaimed Pensions
• Lost Treasury Bonds
• American Indian Trust Royalties
• War Claims for US Nationals