Time Limits for Claiming Property
The time period that property remains unclaimed, after which it is treated as abandoned by the owner, is set forth for a variety of property types.
Timing, as they say, is everything. This section contains important information relating to the dormancy periods for various types of property. Knowing what you have and how long you have to claim it are key factors in the unclaimed property process.
There are, of course, many forms of property that may potentially go unclaimed. Additionally, states vary greatly as to when a particular type of property is considered unclaimed. In general, states have established separate time limits for various classes of property. The more commonly used property classifications are:
- Bank accounts: For most states, a bank account is generally presumed abandoned if it is unclaimed by the apparent owner after three or five years. As always when dealing with multistate laws, however, each state varies as to how it treats bank accounts for purposes of unclaimed property.
- Business association dissolutions or refunds: Eventually, members of a business association go their separate ways. Unfortunately, the assets of the dissolved association don't always do the same.
- Checks or drafts: Contrary to the saying, a check is not always in the mail. Sometimes, it is lost in a drawer or hidden away in stacks of other unfiled papers.
- Demutualization proceeds: Demutualization refers to the process by which mutual organizations or companies convert themselves to for-profit public companies that distribute profits to their shareholders in the form of dividends. During the process, policy holders are offered either shares or money in exchange for their ownership rights in the mutual company. Since 1930, over 200 mutual life insurance companies have demutualized and distributed more than $100 billion to policy owners.
- Gift cards or customer credit: Who hasn't found an expired gift certificate or gift card while spring cleaning? Gift certificates, gift cards, and customer credits issued by a retail establishment in the ordinary course of an issuer's business are very common forms of property that frequently go unclaimed.
- Insurance policies: Life insurance policies and similar investment vehicles are a great way to provide for your loved ones in the event you pass away. However, they don't do much good if the proceeds don't reach their intended recipients.
- IRAs or Retirement Funds: Participating in an IRA or other form of retirement plans (e.g., SEPs, defined benefit plans, 401ks) is a great way to provide much needed funds for those who put in their time in the workforce and retire. However, such retirement vehicles don't help at all if the participant loses track of the funds saved.
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This is an area of potential federal/state conflict where federal law may preempt state provisions. For example, it has been federal policy that the Employee Retirement Income Security Act of 1974 (ERISA) generally overrides state laws relating to employee benefit plans.
- Money orders: Like any other scrap of paper, money orders can easily be misplaced or mixed in with the hundreds of other scraps of paper found in most homes. Most states have a fairly long period before an unused money order is considered abandoned. Nevertheless, the clock is still ticking for cashing such valuable assets.
- Other property: Every kitchen has a sink. The same applies to state unclaimed property laws. Many states have a catch-all provision for intangible property not otherwise specified.
- Proceeds from class action suits: Class action suits typically include hundreds, even thousands, of plaintiffs filing a civil suit against a defendant over a common cause of action. Many of these plaintiffs are automatically included in the suit by default and may not even realize that they are entitled to proceeds from the class action award. Of course, there is usually a limit as to how long such awards can remain unclaimed by the entitled recipient.
- Property held by courts or public agencies: Courts and various public agencies (like police departments) regularly hold funds and other forms of property in the regular course of their operation. Just as regularly, they retain unclaimed property that has not found its way to rightful owners of that property.
- Property held by fiduciaries: By definition, a fiduciary relationship is founded in trust or confidence that the fiduciary will always act in the best interests of the client. Unfortunately, even under the most ideal circumstances, a fiduciary may have trouble transferring property to the rightful owner.
- Safe deposit boxes: A safe deposit box is a secure container rented from a bank or similar institution to help safeguard important documents and valuable property such as family heirlooms. However, these containers are no longer safe if they (and more importantly their contents) remain unclaimed for too long.
- Shares in a financial institution: Like corporations, various forms of financial institutions may be owned by shareholders. Also as with corporations, the interests of a financial institution shareholder may be inadvertently lost for one reason or another.
- Stocks, dividends, and distributions: Investing in stocks and the stock market should be part of any long-term wealth building strategy. However, failing to reap the fruits of such investments is not a sound financial practice. Unfortunately, it happens all the time.
- Traveler's checks: Traveling to exotic vacation destinations is fun. Losing out on unused traveler's checks is not.
- Assets held by utilities: Nobody likes utility bills (except maybe utility companies). The only thing worse than having to pay utility bills is paying them for nothing. Unfortunately, that's what happens when utility account balances go unclaimed.
- Wages or salaries: Quoting a popular song from the 80's song, workers are taking what they're given cause they're working for a living. However, despite the catchy lyrics, workers are not always taking what they are given, letting wages or salaries go unclaimed.
Click on your state on the map, below, to find out the time limits that your state has set for various types of property.