Although unclaimed property has been around for years, it is a fairly new issue for most companies throughout the United States. Unclaimed property, also known as “escheat”, evolved during the days of English Common Law. When an event disrupted the natural descent of property, such as no heirs, the property was “escheated” to the Lord of the Manor. Escheated property then became the sole property of the Lord of the Manor, and rightful heirs lost all claim to the property indefinitely.
Evolution of Modern Day Unclaimed Property
Unclaimed property has come a long way from the days of English Common Law. In those days all unclaimed property was tangible, normally made up of land and stray animals, including horses and cattle. Today unclaimed property consists of intangible property, such as dormant bank accounts, uncashed checks, unreturned deposits and credit balances. Unclaimed property normally falls under two separate categories, either general ledger property types, or securities related property. Unclaimed property laws require reporting to the appropriate State jurisdiction, where each State has their own unclaimed property laws and regulations. Each State has specific due date(s) that unclaimed property must be reported by. The due dates are determined by dormancy period and type of property. Depending on the property type, the dormancy period, on average, ranges between one to five years. Each State requires companies to perform this reporting process on an annual basis, along with the State mandated due diligence/search letter requirements. Generally, and as a rule of thumb, most corporations, banks, and financial institutions are required to submit their reports and remittance by October 31 of each year. Reports and remittance for most insurance companies are due by April 30 of each year. There are a few States where the reporting due dates may differ. All States now act as custodians of this reported property and will turn the property back over to the rightful owner or heirs with true claims to it. The goal on most State Unclaimed Property Offices is to get this unclaimed property back to the rightful owner’s hands. Although, history has it, on average maybe only 25% to 28% of this property is actually ever reclaimed and paid out by the States to the rightful owner.