Isn’t escheat for those that die without a will?
Here is something of interest. A municipal bond becomes city property per an escheat ruling. Not anything unusual on the surface; however…
It all began 20 years ago. Two municipal bonds from the City of Los Angeles are purchased. The purchase helped the city raise money for various projects. Two years ago, the city decided one of the bonds was raising too much money for its investors, so it recalled the bond; essentially buying out the investment.
When the owner checked on the second bond, a matured DWP bond kept in a safe deposit box, it was discovered the bond’s entire value was now city property. This was due to a process known as escheatment. Escheatment is a legal process by which a government agency can obtain unclaimed property, usually when someone dies without a will.
Since the owner is alive and the city has her money she contacted her city councilmember, Janice Hahn, to find out what had happened. This is the start of a nearly two-year adventure. The Los Angeles Times heard about this, investigated and wrote an article which was recently published.
Here is a summation of the adventure. In 2002 the then mayor was looking for new sources of money as the city faced a “structural deficit.� This launched the escheatment plan. The plan would gave authority to the city to rightfully claim possession of unclaimed matured municipal bonds. The city in return was to put out an announcement that the bonds had been mature for three years and needed to be claimed within three months. The city council passed the motion unanimously.
A city ordinance dated March 18, 2003 enacted the escheatment process. This garnered approximately $2.5 million worth of outstanding bond value.
The ordinance declared the unclaimed bonds would become city property “in conformity with the procedures and notice requirements set forth in Government Code Section 50050.�
Section 50050 deals with local agencies taking possession of unclaimed property in their treasuries and calls for “a notice to be published once a week for two successive weeks in a newspaper of general circulation published in the local agency.�
According to the Times article the bond maturity notice was posted in the Daily Journal. However, the Daily Journal is a specialty publication aimed toward the legal profession. The Daily Journal has a daily circulation of 9,800. The city was trying to reach out to a population of 3.9 million for notification of the maturity. Something fishy here?
If this appears to miss the concept of general circulation, let’s review a second escheatment in 2005, for another $2.5 million. To announce this impending escheatment, city council files show the city clerk entering into a contract with the Metropolitan News, a daily L.A. newspaper with a circulation of only 2,500. Did anyone with the city miss the part where it says general circulation?
The city council that unanimously approved the 2003 escheatment includes 13 current city council members. Yet most of the council seemed unfamiliar with the issue when Councilwoman Janice Hahn introduced a motion at the April 18th council meeting calling for the city treasurer to investigate the escheatment process.
At the meeting, Councilwoman Hahn told the members about the bonds owned by the citizen she represents. Hahn explained how the 2003 public notice was not seen and how upon retiring goes to cash the bond, safely tucked away in the safe-deposit box, only to be informed by the city attorney’s office that the city owns the money. All her money is gone because the escheatment was in accordance with state law. Hahn also pushed the issue that the bond was held for 23 years to maturity and then went into the city’s general fund after three months without being claimed.
Councilwoman Hahn did put forward a motion to review the escheatment process and the city council unanimously passed the motion.
Wondering who has the bond money? The rightful owner! It did take several years and persistence, but she has her money and with the help of Councilwoman Hahn, the escheatment may be changed.
The time period to determine if cash or property is unclaimed varies from state to state; however, once it is determined to be unclaimed state law mandates the funds be turned over to the state for safe keeping. Each state then holds onto this unclaimed property until the owner does claim it. Do a free money search to see if you have any unclaimed cash. You may find a small amount or you may find thousands of dollars.
