Billions of dollars worth of unclaimed funds are being held by state departments across the United States which can be rightfully collected by their legal owners through a simple online process.
Feb. 1 was Unclaimed Property Day. Unclaimed property refers to “accounts within financial institutions or companies in which there has been no activity generated (or contact with the owner) regarding the property for one year or a longer period,” according to the National Association of Unclaimed Property Administrators (NAUPA). By law, such properties are turned over to the state.
For instance, an individual may have rented a property in Texas by putting up a security deposit. If the person moves to New York and fails to collect back the deposit after a set dormancy period, the money becomes an unclaimed property and goes to the state.
NAUPA estimates that at least one in seven individuals in the United States have unclaimed funds, which at the current population count, comes to roughly 48 million Americans.
More than $5 billion worth of unclaimed property is returned by states annually, the organization stated. This includes bank accounts, safe deposit boxes, utility security deposits, stocks, uncashed dividends, refunds, trust distributions, traveler’s checks, customer overpayments, certificate of deposit, unredeemed gift certificates or money orders, insurance payments or refunds, life insurance policies, uncashed payroll checks, mineral royalty payments, and annuities.
NAUPA is a network managed by the bipartisan National Association of State Treasurers. The association has a dedicated webpage where Americans can search whether they have any unclaimed funds in their name.
Each state has its own database, and the NAUPA webpage gives direct links to state websites where individuals can conduct searches. In addition, NAUPA also maintains a missingmoney.com website.
“Unclaimed property is reported to the state in which the company or organization resides. Therefore, it’s common to have unclaimed property in multiple states, especially if you have moved to another state,” NAUPA states.
Claiming Process
The claims process for getting back property varies by state. As a general first step, the individual should initiate the claim per instructions provided by the state holding the unclaimed property.Next, the person will have to prove their ownership with relevant documents. For instance, someone seeking to reclaim a security deposit for a rental property may likely have to show the rent agreement.
The claimant will also have to provide proof of personal identity like a driver’s license, social security number, or passport. Some states allow citizens to submit documentation online while others require mail.
When all relevant documents have been submitted, the unclaimed property department of the state will seek to verify the individual’s right over the funds.
Once verified, the department will begin processing the claim. Certain states can complete the verification and processing steps in less than 30 days. Some states may keep a small amount of the unclaimed property as a holding fee.
If the claim is processed successfully, the state will return back unclaimed funds to the individual. Most states do not usually have a deadline for holding the unclaimed property.
Unclaimed Properties
The National Association of State Treasurers recommends multiple ways to prevent financial assets from becoming unclaimed properties.“The easiest way to prevent unclaimed property is to maintain activity on all financial accounts. This includes accounts such as your checking, savings, and certificates of deposit. For these types of accounts, making a withdrawal or contribution every now and then is essential,” the association stated.
“Similar activity may be beneficial for brokerage accounts, IRAs, or employer-sponsored plans as well. Even the slightest activity can help keep an account active. This can eliminate the threat of an account becoming inactive and unclaimed.”
The association recommends that individuals keep their contact information with financial institutions updated at all times. If contact info is outdated, a financial institution may fail to get in touch with an individual regarding any unpaid funds and the amount could turn into an unclaimed property.
People should also keep in mind that they may have to pay taxes on assets claimed. Certain funds do not attract taxes, like a rental deposit, as the individual may have already paid taxes on their income which was likely the source of the deposit.
However, unclaimed property like unredeemed gift cards or life insurance policy beneficiary payments can attract taxes.
