About Unclaimed Assets

Money is deemed unclaimed if contact is lost with its owner. Often, this happens when the owner dies, her name changes through divorce or marriage, he moves without leaving a forwarding address or records are either illegible or incomplete. When the rightful owner does not claim an account during the "dormancy period," usually about seven years, it is transferred to the state government's unclaimed property trust fund, also called "escheat." As of last year, the state of New York's account alone had a value of $8 billion.

History

The essence of unclaimed property law dates back to feudal times where, under British law, the concept of "bona vacantia" was introduced where the crown claimed rights to unclaimed property. Several hundred years later, there was a push in the United States toward uniform unclaimed property laws, including allowing states to transfer that property to general operating accounts. Of course, when a valid claim is made, states relinquish funds to the rightful owner. In the meantime, the funds are used for the benefit of the citizens of the state.

Significance

Millions of people in the U.S. are due sums of money from a state's unclaimed property trust fund, particularly money left by deceased relatives who passed away without valid wills or financial data. Death benefits often go unclaimed because beneficiaries do not file the proper papers and insurance companies did not or could not track them down. Sometimes people leave assets behind when they move. Finally, funds held by the federal government are sometimes forgotten.

Time Frame

An institution is allowed to maintain unclaimed funds for about seven years before turning them over to the state. The state, in turn, holds the balances in perpetuity---there is no time limit placed on their recovery. The same is true for the federal government.

Size

In 2007, as a whole, states received into their unclaimed trust funds almost $23 billion. The federal government holds more. It has over $13 billion in unclaimed savings bonds, and hundreds of billion of dollars in Social Security checks and IRS refunds that have not been claimed. Finally, over 25% of all life insurance proceeds are not claimed.

Effects

You could have money due you and not know it. To find out, contact your state's unclaimed asset trust fund. Several websites also exist to help you identify unclaimed funds (see Resources).

Resources

• More about unclaimed assets
• Still more about unclaimed assets