Unclaimed property (sometimes referred to as abandoned) refers to accounts in financial institutions and companies that have had no activity generated or contact with the owner for one year or a longer period. Common forms of unclaimed property include savings or checking accounts, stocks, uncashed dividends or payroll checks, refunds, traveler's checks, trust distributions, unredeemed money orders or gift certificates (in some states), insurance payments or refunds and life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments, and contents of safe deposit boxes.
Acting in the best interest of consumers, each state has enacted an unclaimed property statute that protects your funds from reverting back to the company if you have lost contact with them. These laws instruct companies to turn unclaimed funds over to a state official who will then make a diligent effort to find you or your heirs. Most states hold lost funds until you are found, returning them to you at no cost or for a nominal handling fee upon filing a claim form and verification of your identity. Since it is impossible to store and maintain all of the contents that are turned over from safe deposit boxes, most states hold periodic auctions and hold the funds obtained from the sale of the items for the owner. Some states also sell stocks and bonds and return the proceeds to the owner in the same manner.
Remember, property becomes lost due to a company having no communication with the owner. You should contact institutions that hold your money or property every year and especially when there is an address change or change in marital status. For security reasons, most financial institutions do not forward mail. Keep accurate financial records and record all insurance policies, bank account numbers with bank names and addresses, types of accounts, stock certificates, and rent and utility deposits.
- Cash all checks for dividends, wages, and insurance settlements without delay.
- Respond to requests for confirmation of account balances and stockholder proxies.
- If you have a safe deposit box, record its number, bank name and address, and give the extra key to a trusted person.
- Finally, prepare and file a will detailing the disposition of your assets.
Utility deposits are probably the most common form of unclaimed property. Whether it be for natural gas, electricity or telephone etc. Financial institutions don't generally forward mail when someone moves, and since the utilities are required to refund you of your deposit when you move, that money often times goes into the unclaimed property accounts because of the lack of mail forwarding.
Bank accounts (savings, checking, CDs, Money Markets, etc) can often become considered abandoned if there is no activity or communication over a period of time. Additionally, many times people think they have closed an account when in fact it still has a balance. A prime example of this would be when someone gets an auto loan from a credit union that they haven't been a member of. In order to get that loan, they are required to open a savings account. And since they don't regularly do business with this credit union, by the time the loan is paid off, the savings account has been long forgotten.
Maybe the check was just never cashed for some reason, or the beneficiary moved... perhaps you were listed as a beneficiary when someone passed away, and you were entitled to death benefits. There are a myriad of ways the benefits could be in this form of unclaimed property.
Name changes, address changes, marriage, divorce... even death. These are the common reasons for tax refunds becoming unclaimed property. The IRS estimates some $450 million dollars in tax refund checks go uncashed each year.
Some of the largest unclaimed money claims that happen are due to stocks that have been long forgotten. Often mergers and acquisitions of the companies is the cause of these stocks becoming forgotten. Perhaps even the owner of the stock forgets because the statements fail to get properly forwarded when he or she moves.
It's common enough for savings bonds to become long forgotten due to the time it takes for them to fully mature. The U.S. treasury has over $11 billion in unclaimed bonds. One of the major factors for this is that only 2% of bond holders are even notified when their bonds mature.
If you've even had a HUD or FHA loan with less than 80% loan to value, you were required to have mortgage insurance until such time as that loan to value is below the 80% threshold. While you're still paying mortgage insurance, if you sell the home, pay it off, or even refinance with a conventional mortgage, you're often entitled to a prorated refund of some of that mortgage insurance premium. Not surprising to hear about a government agency, but it can often be months before they get around to notifying you of your refund. By then your mail forwarding is often expired and the notice never gets to you.
The most common reason safe deposit boxes become unclaimed property is death. Once the payments for the safe deposit box stop, and no one steps forward to claim the contents then it becomes unclaimed property. Because there is no paper trail (ie: a monthly statement), it's no wonder safe deposit boxes often go missed when estates are distributed.