Assets become unclaimed, forgotten, lost, or escheated when the contact with the rightful owner is lost over time due to:
After the dormancy period expires, unclaimed properties or money are usually handed over to the state where they are based, being legitimately protected and preserved to be returned to the owner instead of being reverted to the original source who distributed them.
To claim untaken property in the U.S., you have to file a claim and be ready to present documents that prove you are the lawful owner. The state authorities will start to investigate the claim and most probably will contact you, requesting more information or supporting evidence, depending on the case, such as:
Typically, if the state accepts the demand, you'll have to sign an agreement stating that if somebody else successfully claims the assets you receive, you will repay the new petitioner the amount they're entitled to.
In 2020, federal agencies, states, and other national or governmental organizations collectively held around $49.5 billion in unclaimed cash and benefits, with $13 billion in New York alone. This means $150.82 for each American resident. According to the National Association of Unclaimed Property Administrators (NAUPA), the vast majority of these assets comes from:
At the federal level, a key holder of unclaimed funds is the Internal Revenue Service (IRS), with $146.6 million in refund checks that have never reached their beneficiary. The average undeliverable refund check value is worth $1,471.Moreover, annually, approximately 25,000 payments and 15,000 savings bonds return as "undeliverable" to the Department of the Treasury. NAUPA estimates that only 5% to 20% might be reclaimed in the future.
The top 10 states for the total amount of unclaimed, lost, or forgotten properties are:
Based on the unclaimed property per capita rate, the top 5 are:
Unclaimed assets originate from multiple sources, such as:
The state typically holds unclaimed assets for five years. This is also the "dormancy period" known as the amount of time that starts when a financial institution reports funds or accounts as unclaimed and ends when the government officially considers the property as "abandoned." The time limit might be different, depending on the type of asset and the state of jurisdiction. For example:
The current dormancy phases are:
In recent years, there's been a tendency to cut the safekeeping lengths and speed up the transfer of unclaimed property to the state treasurer.
As there is no official centralized information service, instant asset search will not show up with unclaimed money information, so you can search for unclaimed money by using the following governmental agencies and their specialized databases:
For foreign claims, go to Treasury Managed Accounts - Unclaimed Moneys. You can also check if you're owed funds on websites like www.MissingMoney.com that feature collective records of all state-held unclaimed possessions. Before you do, verify if they're endorsed by the NAUPA.
Escheatment is the process through which the state/government takes ownership of unclaimed estate assets or properties until the legal owner claims them. It usually happens when:
As long as assets are filed as "unclaimed," they're not taxable. You start paying taxes for any abandoned property when you reclaim it, and you get a state approval - that's when it's officially recognized as "taxable income." However, there are some unclaimed investments from an IRA or 401(k) that can be reclaimed tax-free.
Fifty United States, Washington DC, Puerto Rico, and the U.S. Virgin Islands encourage unclaimed property holders to file an annual Negative Unclaimed Property Report to make sure they're up to date with their escheatment reporting and to maintain a record of voluntary compliance with the State Treasury Department. Although in most states it's not an official statutory requirement to submit it, the states where holders can file a report allow either of the following deadlines: October 31st, November 1st, or April 15th.
All states call for due diligence letters to be sent to apparent titleholders of abandoned property to avoid escheatment. Due diligence rules and standards change from one state law to another in terms of:
The U.S. unclaimed property legislation defines the "holder" as any individual or business entity in possession of assets that belong to another party and fall under a state's unclaimed property regulations. Frequently, holders of unclaimed assets can be in the following categories: business associations, financial institutions, credit unions, insurance companies, securities firms, utility companies, sole proprietors, fiduciaries, brokerage firms, courts, medical facilities, government entities, and public officers.