States Governments and Unclaimed Property

A Brief Overview of How Assets and Property Become ‘Unclaimed’ Property becomes unclaimed when a financial institution or company loses contact with the owner of the assets for a period greater than one year, known as the dormancy period. Unclaimed property can be savings accounts, stocks, traveler’s checks, insurance payments, life insurance policies, or contents of safe deposit boxes to name a few. After a period of time specified by state law, holding companies have to turn over any unclaimed property to the state. The state will then attempt to locate the owner of the property and assets. The state can use these confiscated funds for government use while they attempt to locate the owner. When accounts or property are deemed abandoned, they are then converted into cash and taken by the state. In most states heirs can always reclaim their property, even after decades have gone by. However, States have different laws regarding unclaimed property. Many states do not pay interest or account for investment gains when they takes ownership of assets and, therefore, heirs lose out on those potential earnings. Unclaimed property and lost assets can range in value from a hundred dollars to half a million dollars. Currently, states in the United States hold an estimated $42 billion in unclaimed property; this is an increase from $32.8 billion in 2010.   Case 1: Delaware. In the fiscal year 2013, 16 percent of Delaware’s total general fund revenue came from unclaimed property, making it the state’s third largest revenue source. During a Supreme Court hearing on a California unclaimed property law, two justices stated that Delaware and several other states have not been working hard enough to inform citizens of their unclaimed property. The Council On State Taxation (COST) rated U.S. states on their unclaimed property laws. The COST report gave Delaware a score of D-, placing Delaware among the lowest ranked states. The score is based on […]