Unclaimed property can refer to several situations: a house without a known owner, an outstanding paycheck, and even an old gift card with leftover money. In an official capacity, unclaimed property is a unique institutional challenge -- and one that leaves billions of dollars in limbo across the United States.
You may be wondering, how does unclaimed property occur on such a large scale? And, how is it handled? The following guide will review the various ways unclaimed property can come about and what can be done to resolve different situations. Keep reading to learn about the various guidelines that govern unclaimed property across the country:
What Does It Mean When Property is Unclaimed?
When property is unclaimed it means that there has been no activity or contact with the rightful owner for a designated period of time. This time is referred to as a dormancy period, and once it expires the unclaimed property must be turned over to the state. The dormancy period in most states is around five years.
Unclaimed property can refer to money or assets, and is typically held by a company or financial institution. An example of unclaimed property could be as simple as a refund for a cancelled event, or as valuable as an outstanding life insurance policy.
The only way to receive unclaimed property once it has been turned over to the state is by filing a claim. This process often requires numerous supporting documents, specifically when claiming property from an Estate.
Is It Worth It to Claim Unclaimed Property?
It can be worth it to claim unclaimed property, depending on the circumstances and assets in question. If you never received your security deposit from an old landlord, it may be easy enough to file a claim and attempt to get your money back. Keep in mind that unclaimed property is regulated on a state level, and some proceedings can be more difficult to navigate than others.
Unfortunately, a large portion of unclaimed property belongs to now deceased individuals. In these cases, the next of kin may have a claim to the property. However, claiming property on behalf of a deceased individual can require a significant amount of time and effort to be approved. Additionally, once approved the property may be subject to income taxes and other related expenses.
Is Claiming Unclaimed Property Legal?
It is legal to claim unclaimed property if you are the designated owner or beneficiary. In order to do so, you will need to provide supporting documentation proving your identity and relationship to the former property owner. This can be somewhat challenging; although it is still legal to file as long as you have a legal claim to the property.
What Does It Mean When a House is Unclaimed?
When a house is unclaimed, it typically means the bank is unable to get in contact with the previous owner for the state-determined dormancy period. In these cases, the house is most likely abandoned and will be repossessed by the bank and ultimately the state.
Note that the phrase “unclaimed property” does not exclusively refer to real estate or houses; there are several common forms of unclaimed property. For example, it can include paychecks, money orders, refunds, uncashed dividends, annuities, stocks, and more. In each of these cases, unclaimed means the owner is out of reach and the state will take ownership of the asset.
Are Uncashed Checks Unclaimed Property?
Uncashed checks are another example of unclaimed property. Essentially, employers can determine when an outstanding paycheck has not been cashed. Upon recording this information, the employee has a responsibility to contact the former employee until the dormancy period has expired. The employer must then classify the outstanding paycheck as a liability, and follow the reporting guidelines in that state.
This type of situation can happen for a number of reasons. For example, an employee could move out of state and submit an incorrect final forwarding address. In other cases, the final paycheck could be lost in the mail and forgotten about. No matter what the circumstances are, the employee is entitled to the uncashed wages and can file a claim accordingly.
Unclaimed Property Rules by State
The most significant determining factor when it comes to claiming unclaimed property is the state in which the asset is located. Each state has unique laws governing every aspect of unclaimed property, from contacting owners to approving eventual claims.
Several states have laws requiring institutions to contact the rightful owner of unclaimed property in any instances where the property is valued at more than $50. These states include Arizona, Missouri, Montana, Nevada, and several more. Other states, such as Virginia and Alaska, require unclaimed property to be reported when it is over $100 value.
The required dormancy period also varies by state. In both California and Colorado, the dormancy period is one year for outstanding wages and seven years for non-bank money orders. In contrast, Mississippi has a dormancy period of five years for wages and safety deposit contents, while traveler's checks have a dormancy period of 15 years.
The various differences in regulations can make navigating unclaimed property a difficult process, both for recipients and business owners. Overall, the best place to start when attempting to recoup or report unclaimed property is by reviewing your state-specific laws.
What States Require Negative Reporting for Unclaimed Property?
Certain states require companies to report a lack of unclaimed property -- through a process called negative reporting -- annually to demonstrate a continued compliance with the state’s laws. A few states that require negative reporting include:
Oregon: Negative reporting is required if the institution has been audited within the last five years, or if the company is an active holder of unclaimed property.
Connecticut: Negative reports are required if the company is incorporated, licensed, or physically located in the state of Connecticut.
Maryland: Required negative reporting from nursing homes, banks, insurance companies, and utility providers.
Other states, such as Maine or Michigan, do not require negative reporting but strongly encourage its use. While places such as Mississippi are against negative reports entirely. Again, the regulations vary dramatically by state so always consult with the regulations before filing a claim.
Avoid This Confusion - Create Your Will Today
Did you know that there is roughly $49 billion in unclaimed property across the United States? This figure cannot be entirely attributed to forgetfulness or even fractured state regulations. Instead, the amount of unclaimed property is the result of a combination of factors -- all of which have left individuals across the country without their rightful property.
If you are curious how to prevent your loved ones from dealing with this type of situation, consider writing a Will today. This process will allow you to designate exactly what will happen to your property upon your death -- and will prevent your assets from going unclaimed. While it may sound difficult, this task can help you protect your loved ones and avoid placing additional responsibilities onto them during a challenging time.
Unclaimed property can include a number of different asset types, from real estate to tax returns, but what they each have in common is that they are not helpful when stalled in regulatory proceedings. One option to avoiding the challenges of unclaimed property is to create a Will and outline your future wishes.
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