Escheat

[mrWinter]

Looks like it has been covered on ER forum before, but I just listened to a planet money podcast about escheat, which was all news to me:


https://www.npr.org/2020/01/24/799345159/episode-967-escheat-show


Scary stuff.


If you aren't familiar, escheat is the process by which states take 'unclaimed' assets. What constitutes 'unclaimed' or lost assets varies state by state. Apparrently Delaware now considers any account not logged into in the last three years as lost and the assets will be taken, (prehaps more acccurately 'held', but listen to the story for the implications).



Seems to me like citizens of Delware have plenty incentive to make that threashold lower and lower and lower to make it easier to fill their coffers with money from all around the country.



Moral of the story, log on to your accounts regularly I guess.

 

[Montecfo]

Moral of the story, log on to your accounts regularly I guess.

2nd moral of the story:check sites such s www.unclaimed.org from time to time to make sure they do not have your funds or those of a family member. Know where to go to find escheat property in your state or other states where you have lived.

I have checked and recovered some small amounts.

 

[JoeWras]

One of my banks starts tagging your account a one year if you have no activity. (Not just signing on.) So, I make a $10 transfer every year.

This is way before escheat, but it is the start of the process. I need to get out of that bank.

 

[gauss]

If I am not mistaken, the state does not take ownership of your money, but just holds it until you come forward to claim it. They also publish the fact that they are holding money for you.

This is also useful if you die,and your executor (personal representative etc.) does not find all your assets before completing their assignment.

I think I prefer this scenario as opposed to a business silently holding it and not disclosing it.

IMHO, nothing to be afraid of here.

-gauss

 

[athena53]

DS is going through that now with the state of NJ. I started the process with MissingMoney.com and found over $1,000 of my Ex's money was being held. It's mostly dividend checks from company stock he was issued and couple of small savings accounts he didn't close. It was complicated to start with and NJ didn't make it easy. The Ex died in FL, penniless and in debt. An attorney I consulted said there was no need to open estate proceedings. If any creditors came out of the woodwork we could tell them that they could open an estate. There were none.

Even though we noted on the forms why there was no estate probated, NJ rejected it because- there was no proof of probate of the estate. We finally figured out that we needed an Affidavit of Small Estate and it was DS who guessed correctly that it should be sent to NJ, not FL. THEN NJ Wanted to know the amounts claimed- as if we hadn't brought them up before. DS went on-line and couldn't find out because a claim had already been filed (his). This has been going in for two years now. I found the original paperwork in an old e-mail and resent it to DS. Fingers crossed.

 

[JoeWras]

If I am not mistaken, the state does not take ownership of your money, but just holds it until you come forward to claim it. They also publish the fact that they are holding money for you.

This is also useful if you die,and your executor (personal representative etc.) does not find all your assets before completing their assignment.

I think I prefer this scenario as opposed to a business silently holding it and not disclosing it.

IMHO, nothing to be afraid of here.

-gauss

The only thing to be afraid of is added complexity. Once it goes to escheat, you have to go through hoops to get it back.

I also don't know if the state can make interest off of these monies or not.

My deceased parents both have unclaimed money in escheat in their state. I can see it is less than $250, and from doctors or insurance companies. It is likely on medical bills that were settled after they paid. They may have shredded the checks.

We're not going to claim it because of the complications of trusts, siblings, etc. Overall it is less than $500 and not worth our time of dealing with the many years dormant and settled estate. It is likely only a few bucks.

Will the state eventually get it? I don't know.

 

[CRLLS]

2nd moral of the story:check sites such s www.unclaimed.org from time to time to make sure they do not have your funds or those of a family member. Know where to go to find escheat property in your state or other states where you have lived.

I have checked and recovered some small amounts.

Some years back, I found money that was being held in deceased DF's name from an address he hadn't lived at for >40 years. Collecting was fairly easy considering we were not the named person.

A different state is still holding money in DB's name or over 30 years now.

States do hold the money for future claims. I am not sure for how long. Certainly longer than 1 or 3 years.

 

[JoeWras]

The one take-away I have from this is if you are an executor, check your state's unclaimed money early in the settlement. Better yet, if you are helping mom, dad or anyone you know up in years, check for them now.

Edit: I looked at mom and dad's state's site again, and the nice thing is they give you a little information which all makes sense (overpayment, dividend, etc.), and also a rough number (under $100 or over $100).

I may try to go through the process for me and my siblings now that I am retired. As long as I can keep the lawyer and his escrow account out of it, it may be worth it. (Recalculated as less than $300 in total.)

 

[MRG]

This isn't new. Escheatment happens all the time and goes way back. I worked on an escheatment system many years ago, 1980s. The rules didn't go off of online access to the account as nobody had it. I'd argue many people still don't have online access so I'm not sure they would use as the only criteria.

 

[mickeyd]

I think that I have $10 in my NFCU account and have not visited it for a couple l of years. I keep it there waiting for NFCU to create a great CD so that I can easily jump in before it closes.

 

[SumDay]

Looks like it has been covered on ER forum before, but I just listened to a planet money podcast about escheat, which was all news to me:


https://www.npr.org/2020/01/24/799345159/episode-967-escheat-show


Scary stuff.

I listened to that yesterday as well. I've uncovered small amounts of $$ for ourselves and some family members, but had NO idea of the rest of the story. Love Planet Money podcasts.

 

[JoeWras]

Listened to the podcast, and really not impressed with the theme that companies or states are doing "bad stuff." Of course they will liquidate stocks going into escheat.

I will give them a kudo though. The fact that his E*Trade landed in Delaware escheat is important. Perhaps I need to check Delaware unclaimed too. Going there now...

 

[mrWinter]

If I am not mistaken, the state does not take ownership of your money, but just holds it until you come forward to claim it. They also publish the fact that they are holding money for you.

This is also useful if you die,and your executor (personal representative etc.) does not find all your assets before completing their assignment.

I think I prefer this scenario as opposed to a business silently holding it and not disclosing it.

IMHO, nothing to be afraid of here.

-gauss

Yes, the big caveat here as pointed to in the story, is that the state liquidates assets they escheat. The guy in the story lost out on 100k of growth because his stock was sold in 2008. If I had an account that I hadn't touched in 4 years I could have lost out on 2019 growth and earnings. Would have cost me ~30% in just one year. That seems a problem. Perhaps the lesser of two evils, but a 3 year timeframe seems too short for reason, and there is obvious financial incentive for the states to lean on the side of claiming things 'lost'.

 

[JoeWras]

Yes, the big caveat here as pointed to in the story, is that the state liquidates assets they escheat. The guy in the story lost out on 100k of growth because his stock was sold in 2008. If I had an account that I hadn't touched in 4 years I could have lost out on 2019 growth and earnings. Would have cost me ~30% in just one year. That seems a problem.

Would he complain if Amazon since went to zero? Better real world example: I know of quite a few widely held stocks that have not recovered to 2008 valuations. It is too bad that buy and hold in his case also meant "completely ignore."

Should the states be in the business of owning equities, bonds, real estate? What is the carrying costs of a state managing that?

 

[Born2BRetd]

Thanks for posting. Found an old escrow account with mortgage company.

 

[mrWinter]

Would he complain if Amazon since went to zero? Better real world example: I know of quite a few widely held stocks that have not recovered to 2008 valuations. It is too bad that buy and hold in his case also meant "completely ignore."

Should the states be in the business of owning equities, bonds, real estate? What is the carrying costs of a state managing that?

Yep, good point, I agree. So maybe the story is cherry-picking the one bad outcome out of many other good ones. I'm not saying the entire escheat process is evil, but a three year limit definitely strikes me as rather short. That and the fact that a state other than the state I reside in is getting the money seems like there are bad incentives at play.

 

[Z3Dreamer]

A pet peeve of mine. Used to be, escheated funds were used for widows and orphans. Then the states used this for the general fund. Then they expanded it.

My peeve has to do with the burden on businesses. In the state of NC, pretty much the normal stuff you mention is subject to the escheated laws. In addition, the state (and probably the other 49 states) requires all items found at a business to go through the escheated laws. Used to be my business would find a fair amount of glasses. We would turn them over to a clinic that would use them to supply glasses to poor people. Now we must list them and turn them over to the state, if the state wants them.

Sweaters and clothing? Give them to the thrift shop? No, list them and await the state's decision. If the state wants them, we must pay to have them delivered to the state warehouse. We must deliver them at the date and time they select.

 

[tulak]

Apparently they changed the rules, but when his account was liquidated, it was done without any notification. They should have at least tried to contact him before liquidating his account and transferring it the government.

Overall, I think it’s good policy, but liquidation should only happen if all reasonable means of contact with the account owner was done first.

 

[RobbieB]

Ah, but then there is the case where my first wife checked and found the state had 2 stock certs (mailed to her father who moved) and when she got them they were worthless. Wish they liquidated.

 

[athena53]

A pet peeve of mine. Used to be, escheated funds were used for widows and orphans. Then the states used this for the general fund. Then they expanded it.

<snip>

Sweaters and clothing? Give them to the thrift shop? No, list them and await the state's decision. If the state wants them, we must pay to have them delivered to the state warehouse. We must deliver them at the date and time they select.

My first thought was that the laws do make sense- they keep businesses from profiting when a check is uncashed- but I didn't realize what big business it had become. It's the 3rd-biggest revenue source for Delaware (home to many company HQs). Still, according to the podcast, states are shortening the period before the property is considered abandoned (and this turned over to the state) and, as you noted, expanding the categories of property to which the laws apply.

I hope my son gets his Dad's money back from NJ.