Escheatment occurs when unclaimed or abandoned property, such as a savings account, stock, un-cashed payroll check, or safe deposit box is turned over to a state authority. State law requires a company to use due diligence in locating the owner of the property if it has been dormant for a period of between one and five years. The dormancy period varies in each state. If the property remains unclaimed, the state gains defaulted rights to the unclaimed property. The property is turned over to the state in which the owner last resided and the state becomes the owner.

Information on escheatment for beginners is vital so that you can protect your assets. If the former owner makes a claim to the property, the state will normally provide the former owner with cash equal to the value of the property at the time of escheatment. All interest accrued belongs to the state as revenue. Therefore it is important to keep account information current and stay in touch with businesses and clients. Some considerations for avoiding escheatment are:

1. Estate planning is essential.

2. Keep account information current annually.

3. Reduce your company's exposure to escheatment.

Action Steps
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Plan annually for the future to avoid escheatment

Estate planning is essential for property maintenance. Organize and inventory your property to provide guidance to your heirs, and prepare to transfer your assets upon your death with a will. Set aside time to review your legal documents annually and keep them current.

I recommend: Go to US Law for an understanding of the modern day definition of escheat and how it is commonly used. Read why it is essential to write a will in order to determine how your property is distributed at Suite 101.

Keep account information current so that escheatment does not happen to you

Know the facts about escheatment. Make sure that your family's accounts do not go dormant.

I recommend: You can learn more details at ING Direct. Read how the U.S. Securities and Exchange Commission describes the Escheatment Process. Check with the National Association of Unclaimed Property Administrators if you think you may have outstanding unclaimed property. They also provide state news about unclaimed property.

Reduce your company's exposure to escheatment

Manage the company's risk and build strong customer relationships through communication to prevent escheatment. You can also hire an escheatment service to manage your business for you.

I recommend: Go to Credit Today to learn about the liability for past-due credits. Learn from others at Finance Regs. Read about Escheatment Regulations for the Financial Industry. You can hire an escheatment service such as APEX Analytix. Their automated tracking capabilities uncover un-cashed items.

You may assume that funds left untouched in bank or brokerage accounts are active. However, the escheatment process allows financial institutions to report unclaimed personal property, such as mutual funds, to the state. Accounts are inactive if no withdrawals, deposits or other transactions were made within a three- to five-year period, depending on state law. If the bank cannot contact the owner or if it does not have an updated address, then they must send the funds to the state government, which claims ownership. During escheatment, the state maintains bookkeeping entries of abandoned property or funds, and compiles them into an escheatment list. Escheatment information can be found online, usually at the website of the state's treasury or revenue departments.

Contact your state's Department of Revenue or Department of Treasury online, by phone or by e-mail if you discover or suspect that you have unclaimed personal property. State-specific rules apply for claiming the funds, usually requiring that you prove identity.

1. Find state-specific escheatment information online.

2. Contact the state or a commercial escheatment provider if you find unclaimed property.

3. Take steps to prevent escheatment from affecting your accounts in the first place.

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Find escheatment information or services online

Look for your state's escheatment list to see if you or a relative has unclaimed savings accounts, CDs or safe deposit boxes. Other government agencies also provide escheatment information.

I recommend: The National Association of Unclaimed Property Administrators links to each state and territory's revenue, treasury or finance department website. The Financial Management Service, which is affiliated with the United States Department of the Treasury, also provides information on unclaimed property. The Federal Deposit Insurance Corporation, better known as the FDIC, also gives consumers an opportunity to search for undelivered or uncashed dividend checks.

Contact the state escheatment directory or an escheatment firm to reclaim your funds

Visit the state's website, or contact the appropriate department by phone or e-mail, to learn about the rules for claiming abandoned or unclaimed property. There are also private firms that provide escheatment services, but be aware that some of these companies may charge a fee.

I recommend: Alaska, for example, has a direct link to its unclaimed property division, which is housed under the state's Department of Revenue. ACS Unclaimed Property Clearinghouse is a free resource that helps you find unclaimed or abandoned property in certain states.

Learn to protect your money from state escheatment laws

Avoid the hassle of reclaiming your bank accounts, investments and other proceeds by keeping them active

I recommend: ING Direct offers tips on protecting your accounts from the state or federal government. Some of these include keeping your address and information updated, making balance inquiries and transactions at least once a year, and cashing checks immediately. National Unclaimed Property Associates also provides a checklist to help you keep track of your financial records.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Once you prove that you're the original owner of savings accounts, stocks, bonds or insurance proceeds, the state pays you the amount equivalent to the value of that account when it entered escheatment, minus interest.

Escheatment is the process through which the state takes ownership of property that is, or is believed to be, abandoned or unclaimed. Escheatable property can be both tangible and intangible. However, businesses tend to experience the most conflict with intangible property that the state deems abandoned or unclaimed. Intangible property includes unredeemed gift cards, uncashed vendor, payroll checks and misapplied cash receipts. Property left in storage facilities, vacated apartments and such falls into the tangible category.Escheatment laws and regulations are both general and state-specific. Because property rights are regulated by each state individually, it’s the state that defines what, where and when abandoned or unclaimed property is turned over to the state. But there are also certain general guidelines to follow, regardless of the state in which your business is located. To know that you are following proper escheatment laws and regulations, you should:

1. Know the standard laws of escheatment related money - abandoned or unclaimed bank and investment accounts.

2. Familiarize yourself with your state’s laws for abandoned property in vacated apartments, storage units and business spaces.

3. Understand time frames involved in the escheatment laws and regulations for your state.

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Learn about the standard laws of escheatment related to abandoned or unclaimed bank and investment a

Owners of bank accounts, investments, cash, securities and other investments stand to lose the rights to those accounts or financial property if the property goes unclaimed for a given period of time - usually 5 to 7 years. Owners of banks, brokerage firms and other businesses dealing with financial matters should be aware of the escheatment laws in their states so they'll understand about their rights to property abandoned by account holders, or accounts they own and might be in danger of abandoning.

I recommend: The U.S. Securities and Exchange Commission addresses basic escheatment laws pertaining to financial accounts that have been abandoned or have gone unclaimed. Regardless of state law, overall regulations require the brokerage firm or bank to make a diligent effort to track down the owner of the account before initiating escheatment proceedings. One method banks and businesses can use to track down owners of unclaimed money, investment accounts, and other funds is to use a service like the one provided by the National Association of Unclaimed Property (NAUPA), which hosts a website where individuals can look-up property held in their names. This organization is affiliated with state treasurers’ offices and provides resources to both financial institutions and individuals to ensure compliance with escheatment laws.

Understand your state's laws for abandoned property in vacated apartments, storage units and busines

While a tenant is required to move out all property from an apartment, business or storage unit they are vacating, property is sometimes left behind. The landlord or owner of the space being vacated must contact the former tenant to make arrangements to return the property. In the meantime, the landlord may choose to charge the tenant storage costs. If the tenant doesn't claim the property after the specified time, the landlord must place an ad trying to find the owner of the property. If there is no response to the ad, the landlord turns the property over to the local police department to attempt to locate the tenant/property's owner. If this person can't be found, the landlord may become the owner of the property and can do with it whatever he or she sees fit.

I recommend: State-specific laws and regulations are available from state agencies such as the California Department of Consumer Affairs website. For property abandoned in storage facilities, all the state storage laws, including escheatment laws and regulations, are accessible from StorageLaws.com.

Understand the time frame for enacting escheatment proceedings on abandoned property or money

Learning your state's escheatment laws and regulations including the exact time frames for both property abandonment and presumption of death, will help make the process smoother for you should you have to initiate an escheatment procedure. The time frames one must wait before initiating such procedures differs by state and by property type. For property left behind in an apartment, storage facility or other rental space, the property's owner may have as many as two to three weeks to claim the property but can most likely be charged an additional storage fee of the property. Then additional time is usually needed if your local police department is involved before you as the landlord can actually sell or claim the property. In case of monetary funds, the presumption of death can be a much longer process, especially if the person owning the funds or accounts has no heirs.

I recommend: The US Legal Definitions site provides a list of general legal forms relevant to escheatment laws landlords must follow. Refer to the LawDigest.com for your state’s laws on the disposition of unclaimed property and escheatment procedures to learn the time frames involved.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you offer gift cards for your goods and services, be sure to check your state's escheatment laws and regulations. In many states, gift cards are subject to escheatment laws and regulations after three to five years. To navigate these laws, some gift card issuers charge customers fees to cover dormancy and administrative costs. However, other states now exclude gift cards from escheatment laws and regulations altogether.
• •  A certified professional accountant (CPA) can help businesses better understand their escheat liability by performing an escheatment analysis. To do this, the CPA investigates the characteristics of the escheatable property, identifies involved parties and the period of time that the property has been deemed unclaimed or abandoned.

Escheatment is the process by which lost or unclaimed property is turned over to the government. Escheatment can happen in a variety of ways: when someone dies without relatives or a will, when someone abandons property, when property is lost, or when someone fails to claim money or property that is rightfully theirs. Whether you're in an escheatment situation or not, it's a good idea to know some escheatment key terms.

Action Steps
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Escheatment

Escheatment is the legal transference of property from private citizens or organizations to the state for safekeeping. Some states have time limits on how long property is held.

I recommend: The U.S. Securities and Exchange Commission defines and discusses basic escheatment guidelines.

Unclaimed property

When people leave a job without their last paycheck, forget to claim their utilities or cable deposit, or die without a will or relatives, their assets and property are said to be unclaimed.

I recommend: Check out the Texas Comptroller of Public Accounts for more information about unclaimed property. Although unclaimed property is held indefinitely in Texas, other states have time limits.

National Association of Unclaimed Property Administrators

The National Association of Unclaimed Property Administrators (NAUPA) is a nationwide organization of government officials whose job deals with administering unclaimed property.

I recommend: Visit the National Association of Unclaimed Property Administrators for more information about the organization and its operations.

Finding and claiming

If you become aware that you're entitled to unclaimed property that has gone through escheatment, you can take steps to claim it. State unclaimed property laws vary, but generally all you need to do is fill out a form and prove your identity.

I recommend: MissingMoney.com allows people to search almost every state in the country for unclaimed property.

Reporting

If you're a business owner, you need to be aware of unclaimed property laws. If you're in possession of unclaimed property, whether a tenant left behind a deposit, an employee forgot a paycheck, or a client moved without taking assets with them, you're responsible for reporting the unclaimed property to the state.

I recommend: The Pennsylvania Treasury Department details reporting procedures for the state. Reporting laws vary by state, so make sure you know your own state's laws.

Unclaimed property auction

Some states and local governments hold periodic unclaimed property auctions for seized and unclaimed property.

I recommend: Luv2Bid.com has information about unclaimed property auctions.