UNCLAIMED PROPERTY - WHAT IT IS AND HOW IT AFFECTS ESTATE PLANNING
Updated: Sep 27, 2020
For most of us, every penny counts, so it is almost inconceivable that we could have lost track of any money or property. Regardless of how careful we are with our finances, it is possible for utility deposits, credit balances, unused gift certificates, banks accounts, and many more types of property or money to accidentally be forgotten or abandoned. In fact, across the country, there are billions of dollars in unclaimed property being held by the state and federal government. Fortunately, it is often possible to locate this property and obtain it. It is equally important for estate administrators or family members to look for unclaimed property when a loved one dies to be sure that all of his or her property is included in the estate and goes to the intended beneficiaries.
What Is Unclaimed Property?
During the course of life, certain events commonly occur—moves, marriages, divorces, or deaths—that could result in property being unintentionally lost. For example, a move results in a change of address and marriages or divorces frequently involve changes of name, and in the case of the death of a family member, the heirs or beneficiaries may not have complete knowledge of the extent or location of their loved ones’ money and property. The business or other organization holding the money or property may no longer have current contact information for the owner of the property or be aware of the owner’s passing. After several years—usually three to five years, depending upon the relevant state’s law--if the property, which is usually intangible property such as bank accounts or other funds (but could also be the contents of safety deposit boxes), is not claimed by the owner (or if the owner has passed away, the owner’s beneficiaries or the administrator of the owner’s estate), the business or organization is required by law to report it and turn it over to the appropriate state agency (typically, in the state of the owner’s last known address). The legal term for this transfer is escheatment. The amount of time after which the money or property must be transferred to the state may vary depending upon the type of property involved: For example, the unclaimed funds in a bank account may be required to be turned over to the state after three years, but unclaimed wages or salaries are frequently mandated to be handed over after only one year. The state will then hold the property until the owner files a claim to obtain it.
How Can You Find It?
There are some helpful places to look for unclaimed property held not only by the state government, but also by the federal government. The U.S. government has identified several official sources you can check. In addition, the National Association of Unclaimed Property Administrators provides the ability to perform searches for multiple states at a time (though some states have not provided the website with access to their data, it also provides links to the appropriate state agencies of every state) as well as to perform searches nationally and even internationally. If you uncover property owned by you or a deceased relative, you will probably need to send documentation verifying your identity, for example, a copy of your driver’s license, your social security number, or proof of your current or previous address to begin the process of claiming the property.
Note: Legitimate asset locators can help you find unclaimed property but may charge very high fees. There are also some scams in which individuals contact victims using email, letters, or phone calls asserting that the victim is entitled to valuable unclaimed property in an effort to obtain a fee or personal information without any intention of helping them obtain it. It is important to check with your attorney before paying any fees or signing a contract with anyone purporting to be an asset locator.
How Should This Affect My Estate Planning?
An important part of estate planning is creating a comprehensive list or inventory of all of your money and property. Not only will this inventory enable you to consider who you would like to receive your money and property and how it should be distributed, but it will also help ensure that none of your accounts or property ends up as unclaimed property. You should review and update your inventory on a regular basis with your estate planning attorney and make sure that you provide copies of it to trusted individuals.
What If the Owner Is Deceased?
Because so many people have unclaimed property, it is always prudent for the personal representative of an estate to check with the appropriate state agency to ascertain whether the deceased person had any unclaimed property which has been turned over to the state. A person who has been qualified or appointed as the executor, administrator, or personal representative (we’ll refer to them all as the personal representative hereafter) by the probate court or an heir is authorized to file a claim for any money or property on behalf of the deceased owner’s estate. As in the case of an owner who is seeking to claim his or her own property, the personal representative or heir will typically need to provide the owner’s death certificate and a claim form, plus one or more of the following: (i) a letter or certificate of qualification from the probate court; (ii) photo identification; (iii) proof of the estate’s federal tax identification number if one was required; (iv) the owner’s obituary if the owner died without a will; proof the will was probated if the owner died with a will; (v) proof of the owner’s address if the property being claimed did not contain a social security number; (vi) a copy of the court-ordered distribution of the deceased owner’s estate; (vii) the owner’s will and/or trust agreement. State law varies widely regarding the requirements for claiming the property of a deceased owner, so it is important for personal representatives and heirs to check with their probate attorney if they need assistance compiling the necessary documentation. Even if an estate has already been closed, there typically is no statute of limitations that would preclude an heir from seeking unclaimed property belonging to a deceased family member even many years later. The heir must simply provide the required documentation to the state.
WE CAN HELP
It is essential to create an estate plan or update an existing one to ensure that all your property will be distributed to the family members and loved ones you choose in the way you wish. Updating your estate plan to include property or funds that you have recently acquired is especially important to avoid a situation in which it is never transferred to the appropriate beneficiaries because they and the personal representative of your estate are not aware of its existence. In addition, if your loved one has passed away and you need assistance administering their estate, including finding or claiming any unclaimed property, we are ready and willing to help.
ABOUT THE AUTHOR
Matthew D. Massar is an experienced estate planning attorney, founder of the Streamlined Estate Planning Process, and Managing Director at the Massar Law Firm PLLC, a law firm with offices in Austin, Houston, and San Antonio. He crafts estate plans for his clients the streamlined way - with flat-fee pricing, understandable and efficient processes, and a turnaround time of 2 weeks or less. Click here to book a no-cost consultation call with Mr. Massar today.