More “unclaimed property” is available due to new law.
New law has banks and other institutions giving money to the state as unclaimed property
Passage of the Sarbanes-Oxley corporate reporting law and other changes in corporate governance have caused a large increase in the amount of “unclaimed property� money being collected by all 50 states, state treasurers said.
That means a growing number of Americans could collect large piles of money, if they only knew where to look. A Baton Rouge man recently learned that the state of Louisiana owes him about $750,000 in stocks and dividends from an investment account he had lost track of years ago.
“When somebody shows up, you give them their money,� said John Kennedy, Louisiana’s treasurer. “But most people don’t know it’s there.�
States collected $22.8 billion in 2003 in money belonging to people who didn’t come forward to claim it — a 44 percent increase over the $15.8 billion they collected in 2000, according to surveys by the Lexington, Ky.-based National Association of Unclaimed Property Administrators.
In the past, cash flowing into so-called “unclaimed property funds� came mainly from uncashed payroll checks, abandoned bank and brokerage accounts, and inheritances that the heirs were unaware existed.
Several factors have caused the recent spike, state treasurers said. Passage of Sarbanes-Oxley in 2002 forced companies to tighten their auditing processes, leading them to hand over more unclaimed money to governments, said Benny Spann, head of Louisiana’s unclaimed property division.
Banks, for example, must transfer to state governments the money in any account whose owner has fallen out of touch with the institution for anywhere between three to five years, depending on the state’s law.
Sarbanes-Oxley meant financial institutions became more attuned to those laws, Spann said.
Jeb Spalding, Vermont’s treasurer, said another reason is a change in the insurance business. Many mutual insurance companies, owned by policyholders, have reorganized to become publicly traded companies. As a result, policyholders have received billions of dollars in stock and cash from insurers’ initial public offerings —though many don’t realize it.
Some state treasurers said other reasons could be the popularity of Internet stock accounts — which clients sometimes forget they opened — and the fact that Americans are now more likely to move from city to city, meaning they often open bank accounts, then forget them when they move.
The amount of money states returned to its rightful owners has also increased, from about $500 million in 1999 to $1 billion in 2003, according to the unclaimed property administrators’ group.
While the states have to hold on to the funds indefinitely, most people never collect, and most states find ways to use the money. North Carolina and Missouri use the interest to pay for advertisements informing the public about how to collect. Louisiana — where unclaimed money has jumped from $12.7 million in 1995 to about $45 million this year — uses some of its unclaimed cash to finance the completion of an interstate highway.
Kennedy said he faces one persistent obstacle when trying to persuade the public to come forward and collect. When a state government official talks about passing out free money, people with suspicious minds immediately think it’s an “evil government trick.�
Said Kennedy: “I still have people who say to me, ’I know you’re just trying to get my Social Security number so you can hit me with back taxes.�’
Would you like to know if you have money that has gone unclaimed? There are various ways to do this but the easiest is to go to CashUnclaimed.com where you enter your name and a search of all 50 states is done. No need to continue to enter variations of your name with each state.
