As featured in The Wall Street Journal, Money Magazine, and more!

Search: escheat

The Myth of Ownership

This article was written by in Consumer. 23 comments.


Who really owns all of your stuff? It’s comforting to think that everything that we have in our possession, acquired by legal means, belongs to us. That’s not always the way it works, however.

The myth of ownership is expected to apply to people who buy their possessions with credit and can’t afford to keep up with the debt payments. Default on your car loans, and the bank will come and repossess the car — that the bank owns, not the driver. Ignore your mortgage payments for long enough, and the bank will foreclose on your house. The typical American dream of owning a piece of property is rarely achieved because so few families truly own their homes.

Putting aside debt, there are situations when even full ownership doesn’t guarantee you can keep what is yours. The myth of ownership applies even when no debt is involved.

The first example is the process of escheatment by your state. Property considered abandoned can be claimed by the state in which you live or in which the property resides. Savings accounts and insurance policies are some of the more common financial items escheated. If a bank or insurance company can’t contact the owner, they will hand over the funds to the state.

The owner has a chance to recover the funds from the state, but it involves a process initiated by the owner who may not even be aware that the property exists. If you think there might be something of yours out there, start the process here. Most unclaimed property will remain unclaimed — and the states count on this when they plan their budgets and spending plans.

The Supreme Court of the United States has ruled that states can exercise eminent domain in any situation where the state can prove that doing so would provide an economic benefit, and states can transfer that power to a private entity to exercise on its behalf. The result is that even homeowners who have no debt could find that the state will encourage them to leave. The state would offer reimbursement, but would act without the owner’s consent. Traditionally, highways and utilities are the reasons cited for seizure through eminent domain, but in the current legal environment, homes could be seized to make way for malls and sports arenas.

Eminent domain is one of the biggest examples of how our property doesn’t necessarily belong to us. On a smaller scale, New Jersey is now going after unused gift cards. Merchants and gift card issuers like Visa and American Express love unused gift cards. They’ve received the cash and haven’t had to provide any product. They have the most to lose by the state’s legislative decision to require issuers to forfeit the balance on unused cards after a relatively short time period. This decision was overturned in court, but the state is appealing that decision.

When our property can be relatively easily be taken from us by the state, is it really our property?

Hat tip: Darwin’s Money

{ 23 comments }

Inactive Savings Accounts Can Be Turned Over to Your State

This article was written by in Banking. Add a comment.

The state will take your money if you’re not vigilant. I received a warning the other day that I’m in danger of having the funds in one of my savings accounts handed over to the state of New Jersey. I’ll explain why in a moment.

First, I should explain that rather than keeping a simplified financial situation like the one I praise in Seven Zen Principles to Guide Your Money and Your Life, I have savings accounts at fourteen different banks. (I took a minute to count them for verification.) My balance sheet is this long because I open accounts somewhat compulsively to audition and review them on Consumerism Commentary. Therefore, my situation shouldn’t be common. I would say most people have savings accounts at only one or two banks.

With fourteen accounts, even if they are listed and updated frequently in Quicken, it can be difficult to manage your money. If you don’t move money around in each account, the bank is required to turn your cash over to the state, a process called escheatment. The rules are different in each state, but in my state of New Jersey, accounts I own are considered inactive or dormant after a period of two years with no activity.

Earning and receiving interest every month isn’t considered activity. Interest credits have been the only line items in my E*TRADE bank account since I opened it in January 2009. The bank is required to inform me that my account will be released to the state in six months unless I initiate a transaction. I received a letter from E*TRADE the other day stating that.

Since there has been no activity in your account(s) listed above for at least six months, the account(s) has/have been classified as inactive. After 24 months, inactive accounts will be considered dormant. As stated in our Account Agreement, if any of your E*TRADE accounts remain dormant for a specified period of time (as determined by each state), we may be required by law to turn over any funds in your account(s) to the state.

I remedied the problem quickly by transferring a good portion of my money in this account back to my very active electronic checking account at ING Direct. If I were to take no action by next January, E*TRADE would forward my cash to the state as abandoned property. At that point, I could go through the process of claiming the money, but it would be a hassle.

Savings accounts are not the only types of property that can be escheated. Any property where the holder can’t get in touch with the owner is fair game. That includes brokerage accounts, savings accounts, and checking accounts that have been inactive, as well as real property, safety deposit boxes, and insurance policies.

Even an automated monthly transfer doesn’t stop an account from becoming inactive for the purposes of escheatment, so monitor your accounts.

{ 0 comments }

Missing Money: Troll the Web for Abandoned and Unclaimed Property Owed to You

This article was written by in Personal Finance. 7 comments.

The company I work for “found” several million dollars last year thanks to a common law that originated in feudal England to the benefit the King.

Not every check that a company sends in the mail gets cashed. Supposed recipients, such as investors, employees, insurance beneficiaries, companies, and other customers, don’t always keep current addresses on file with said company. When the checks are lost in the mail, and the companies issuing the checks have tried for a year to get in touch with the recipients, the companies can’t just forget about the payment. They can’t reclaim the money. The funds must be escheated to the last known state of residence of the recipient.

States are strongly in favor of this arrangement as it provides them with income from time to time. But the states must also publish lists of the original intended recipients, just in case they come around and want to claim the money that is rightly theirs.

All state unclaimed property offices work together in the form of the National Association of Unclaimed Property Administrators (NAUPA).

The internet and NAUPA have made it easier for states to publish their abandoned property databases as well as for individuals to search these databases. When my company decided to look for money it was owed but never claimed, a search of just the biggest states resulted in claims totaling several million dollars. Needless to say, the company’s internal businesses that received these funds from the various states were quite happy with the unexpected income.

It was probably in 2000 when I first heard that there was a possibility that there existed in the world money someone had once attempted to send to me. I searched the unclaimed property databases for New Jersey, New York and Delaware. Unsatisfied with my results, I searched (fruitlessly) for money originally destined for my parents and other family members.

Missing Money unclaimed propery website logoThese days, searching for unclaimed property is easier. Many states work together to combine their database in one central location, Missing Money. When I originally performed my searches, only 25 states participated with Missing Money, but now there are only 15 states (including U.S. territories) that are not yet included in the central database.

No more than three people in my company work with NAUPA and the states to reclaim all funds originally intended for the businesses, and their first sweep of the largest rates resulted in income of more than ten million dollars. That doesn’t include millions of dollars that was found but will never be claimed due to unidentifiable co-owners.

A quick search of several websites can prove to be worthwhile, even if it doesn’t result in finding millions of dollars. Here are all the links you’ll need:

If you do find that you may be owed money, you’ll have to file a claim and provide positive identification. The process could take some time. If you don’t find anything, put a reminder in your calendar to check back in a year.

{ 7 comments }