It's surprisingly easy for money to get lost in the shuffle of life.
Everything coming at me seems like a scam, lately: texts saying I have a package, emails that I won a prize, phone calls about my cable bill, and the supposed government telling me I might have free money if I would just visit its website. The thing is, that last one is true.
Unclaimed property refers to assets that have been abandoned or forgotten by their rightful owner for an extended period of time. People move, fail to update their address, change their name, or even die. For other unforeseen reasons, their previous paychecks, bank accounts, bonds, and other valuables end up unclaimed. After a set period of time, those assets are turned over to the state, which manages them until they can be reunited with their rightful owners.
There’s at least $30 billion in unclaimed property nationally, according to the National Association of Unclaimed Property Administrators. In my home state alone there’s more than $3 billion of unclaimed funds, according to the Massachusetts Unclaimed Property Division. In the past five years, the state returned $787 million in property to the rightful owners.
Differentiating Fraud And Fact
It is prudent to be a financial skeptic. As awareness of unclaimed property grows, so do bad actors who try to take advantage of the public. You can protect yourself by:
- Using discretion with unsolicited communications. Unclaimed property administrators do not reach out to individuals regarding their property.
- Using only official, trusted sources of information. The only national unclaimed property web sites are unclaimed.org and missingmoney.com, both of which are administered by government entities. They can refer you to the appropriate unclaimed property resource in your state.
If you believe you have been contacted by or become a victim of a scam related to unclaimed property, contact local law enforcement and/or NAUPA.
What Happens When The Owner Cannot Be Found?
If a bank can’t contact a depositor, how long should it hold onto the money before turning it over to the state? In turn, how long should the state hang on to it and what should the state do if the owner never shows up?
Escheatment is a term for the legal process by which unclaimed property reverts to the state when the rightful owner cannot be located. The amount of time allowed for this is known as the dormancy period, and it varies depending on the jurisdiction and type of asset. For bank accounts the dormancy period might be three to five years, but for insurance policies it could be seven years or more.
Note that the first party of the asset — be it a bank, employer, insurance company, or otherwise — is legally required to make its best effort to contact the rightful owner before property enters the custody of the state. That state is then also required to make their own best-effort to find the owner. This is why there are sites like unclaimed.org: It’s the government’s way of trying to find owners who were not able to be contacted by the custodian previously responsible. That technology keeps getting better, too.
(08/15/2017- Boston, MA) State Treasurer Deborah Goldberg makes an appearance at the WEEI studio at ... [+]
“With the advent of our new technology in 2016, our Unclaimed Property Division has been able to provide superior customer service, reuniting people with millions in lost assets,” said Massachusetts State Treasurer Deborah B. Goldberg in an interview. “Our team is always prepared and ready to support people through the claims process and ensure that property is returned to its rightful owners.”
What happens after the dormancy period ends? If the state takes ownership, what it can then do with those funds varies by state. For example, it may go to the state’s general fund, educational programs, emergency fund and disaster relief, or - as was the case in the above photo - to charitable causes.
Taking Action: Reclaiming Your Property
Even if you haven’t moved or changed jobs recently, different assets and institutions have different dormancy periods. As a result, it may take an extended period of time before they appear in the unclaimed property system of their respective state. This is why it’s important to check for unclaimed property regularly.
“States encourage consumers to regularly check to see if they have unclaimed property,” said NAUPA President Patti Wilson in an interview. “New unclaimed properties are added to state databases each year. The easiest way to search is utilizing the state sponsored website, missingmoney.com.”
Searching is a twofold process:
- Start with the national database at unclaimed.org or the aforementioned missingmoney.com.
- Visit your state’s unclaimed property website after conducting your national search. A link should be available at unclaimed.org. In Massachusetts, for example, it’s “findmassmoney.gov.”
- Be sure to search not just your home state, but any state in which you have ever resided, worked, or potentially had family.
A Valpak flyer for "findmassmoney.gov," the Massachusetts Unclaimed Property Division's state web ... [+]
These platforms provide user-friendly search tools where you can input your name and other identifying information. If a match is found, you will receive instructions to initiate the claim process. Be prepared to provide documentation proving your ownership of the assets, which may include identification, previous addresses, and related records. There will be bureaucratic procedures: It may require patience and persistence to reclaim your assets.
“The challenges facing state unclaimed property programs include getting the word out to consumers on the tools available and ensuring the claims states receive are legitimate claims and not fraud,” Wilson said.
How To Prevent Unclaimed Property
I have a client whose filing system is the mailbox. Not an email: a physical mailbox. Stuffed to the brim, if the person hasn't gotten to those envelopes yet, they stay right there in front of the home.
Modern life is complex, and it’s easy to lose track of important documents, forget to update your address with financial institutions, and omit information necessary to stay current. It’s also the fast-track to losing track (especially if your filing system is a mailbox). To that end, you can take the following actions:
- Organize your financial records, which are crucial to preventing assets from becoming unclaimed. Establish a system that includes a comprehensive list of your accounts, investments, and assets, along with relevant contact information. Regularly update these records and inform trusted family members or advisors about their existence.
- Organize you financial payments, including utilities and other bills. Errors don’t just occur against you, but can occur for you, in which case you want to make sure you’ve updated your information.
- Update your financial institutions whenever you have a life change, such as moving to a new residence, changing your name, going through a divorce, and more. This includes not just your employer and bank, but your retirement plan administrator(s), insurance providers, mortgage lenders, accountants, creditors, and any other institution that touches your financial life.
- Consider consolidating accounts where possible, reducing the likelihood of assets being overlooked. Ensure beneficiaries are designated for all accounts, and review these designations periodically to account for any life changes, such as births, marriages, or divorces.
NAUPA provides guidance on unclaimed property prevention methods.
Keeping beneficiary information up to date is equally crucial. Failing to designate or update beneficiaries can lead to assets being tied up in probate, a time-consuming and potentially costly process. Regularly review and, if necessary, revise beneficiary designations on all financial accounts, including retirement plans, insurance policies, and investment accounts. This simple yet often overlooked step can significantly streamline the inheritance process. It ensures your assets are distributed according to your wishes, providing peace of mind for you and your loved ones.
Seeking Professional Guidance
Common hurdles in the reclaiming process may include outdated information, misspelled names, or incomplete records. If you encounter difficulties, consider seeking professional assistance.
Experienced financial advisors, especially one with expertise in unclaimed property, can navigate complexities and provide invaluable guidance. They can also help strategize on how to best utilize these recovered funds for your financial goals, whether it be saving for education, bolstering retirement accounts, or investing for future growth. Reclaiming your unclaimed property is not only about recovering lost funds, but also a crucial step in securing your financial well-being.
Additional Resources
The federal government has a great rundown of all the various places you can look for unclaimed property, from employers to tax refunds to pensions, at usa.gov/unclaimed-money. When in doubt, it is best to verify with the government. Note that NAUPA is working to update its missingmoney.com website to a .gov address. But until that transition is approved, know that unclaimed.org and missingmoney.com are both legit.
