August 16, 2021
Unclaimed (or escheated) Property is money or tangible assets that belong to you but are viewed as abandoned because there’s been no activity or contact by you for a year or more (dormancy period).
What happens to unclaimed property?
If unclaimed, the funds or property are turned over to the state of the owner’s last known address or secondarily to the state or jurisdiction where the business was formed or incorporated. Since Delaware is a popular state for incorporation, significant unclaimed property flows to that state. In essence the unclaimed property program provides an easily acquired stream of revenue for any state or jurisdiction.
What are typical unclaimed properties or funds?
For individuals, this could be uncashed payroll checks, tax refunds, unredeemed gift cards, merchandise credits, consumer rebates, forgotten bank accounts, matured certificates of deposit and security deposits. For businesses, it would also include uncollected vendor payments and customer overpayments.
How to search for unclaimed funds?
Every jurisdiction has a free database lookup that just requires the name of an individual or company name as the starting research point. Many jurisdictions will advertise their websites. States will send questionnaires to businesses seeking additional information on possible escheated funds for which they are obligated to respond. Some states conduct audits through correspondence and the audit period can cover multiple years and multiple states.
Who runs these unclaimed websites?
Every state in the United States and many countries maintain unclaimed property programs.
Is there a limitation period for unclaimed funds or property?
Payroll checks are normally reportable after a year, but vendor checks can have a longer holding period from 3 to 7 years.
What is the drawback for businesses?
If you or your company owe money to others, you are a “holder” and have an obligation to pay what you owe. There is a legal obligation to attempt to contact the payee. Should your attempts be unsuccessful or ignored, the funds must be remitted to the state.
How does a holder remit any funds that they owe?
State or jurisdiction registration and payment processing guidance is provided. There are voluntary disclosure programs to settle claims.