Showing posts from May, 2011

Other People's Money: States Use Unclaimed Property and Accounting "Tricks" To Balance Budgets

The  San Antonio Express had a relatively run of the mill article concerning the Lone Star State's approval of next year's budget.   Many states are struggling to balance (or cutback) their state budgets, and Texas is no exception.  Generally, to balance the budget, state have to either cut services (which is politically unpopular) and/or raise taxes and fees (which is even less popular).  Texas is taking other short-term approaches to address the immediate problems that may cause even more budget difficulty in the long term. For example, one of the ways that Texas seeks to increase revenue is by " allowing unclaimed property to revert more quickly to the state ."  In other words, Texas intends to shorten unclaimed property dormancy periods to take custody of more property more quickly.  In particular, the proposed legislation would shorten the dormancy period for utility deposits from three years to 18 months; money orders from seven years to three years; and ba

California Investigation of Insurance Companies Expands to 10 Insurers

We recently posted a few articles about California's investigation  of life insurers', the expansion of that investigation to other states , and the eventual multi-million, multi-state  settlement between John Hancock and 35 states regarding escheat practices.  Now, according to an article published on , California is investigating 10 more insurers regarding their payment of death benefits.  According to the article, California's investigation has expanded from John Hancock to include MetLife, Prudential, Nationwide, The Hartford, Sun Life Financial, New York Life, Lincoln National and Aegon Group, which includes Transamerica and Pacific Life.  Based upon similar hearings that have been conducted by the Florida Department of Insurance, the total amount of unclaimed funds owed to the states may be in excess of $1 billion.

Oklahoma Limits Claims For Property Sold by State

Last week, Oklahoma Senate Bill 571 was signed into law . Along with making some technical changes to the unclaimed property act, and providing the State Treasurer with additional investment authority, the new legislation  also limits the state's responsibility to pay the full value of claims for property in its custody. Under the former version of the law, if an owner came forth to claim property that was sold by the state within one year of delivery, he or she could collect the greater of the current value of the property or the net proceeds of the sale. Pursuant to the new law , no owner may make a claim for "any appreciation or depreciation in the value of the property or any earnings that might otherwise accrue, after sale of the property by the State Treasurer." Thus, if stocks are turned over to the State Treasurer by a broker dealer, then immediately sold, the owner will not be able to claim the full value of the shares should they appreciate between the time of

Pending Legislation (in Africa) - Kenya Considers Unclaimed Property Law

Though it has its origins in ancient Rome and England , modern custodial unclaimed property laws (where the state takes possession of, but not title to, unclaimed property) are still primarily a U.S. phenomenon.  In the past several years, however, there has been a trend toward the establishment of such laws outside the U.S. (primarily in Europe and the Caribbean).  Now, however, it appears that modern unclaimed property laws may be gaining a foothold in Africa, as Kenya  is considering implementing a broad unclaimed property act.   Though the legislation is simply proposed at present, but would create a government entity to administer unclaimed funds, provide for a reporting and turnover process, and would allow owners to claim property held by the government.  Notably, the scope of the act would also be very broad, applying to bank deposits and nearly all forms of negotiable instruments. A copy of the proposed legislation can be found here . Based upon our quick review, we are no

Companies Are Not The Only Ones Who Report Unclaimed Property Incorrectly

This blog recently mentioned an agreement between a life insurer and the State of California to settle claims of allegedly improper reporting and delivery of unclaimed property.  According to a recent article in the Contra Costa Times (CA) , a California grand jury has determined that several municipalities in Solano County, California have improperly handled unclaimed property.  According to the article , several towns have not reported or remitted unclaimed property in several years.  The investigation also found that all seven municipalities did not maintain policies and procedures for the handling, reporting and delivery of unclaimed property. Unclaimed property noncompliance, it's not just for private holders.  No word on whether the California State Controller's Office will assess penalties or interest.

John Hancock Reaches Settlement With Verus

A little while ago, we posted a short article concerning John Hancock's settlement with the State of California regarding unclaimed life-insurance proceeds.  We later took a brief look at the expansion of that inquiry to some 35 states represented by a third-party unclaimed property auditing firm.  Today, the Florida Office of Insurance Regulation announced a multi-million, multi-state settlement of the John Hancock investigation.  As discussed elsewhere, the regulators alleged that many insurers reviewed certain Social Security files to determine when to stop paying annuities (which are paid by an insurer until someone dies) but were not using that same information to determine when life insurance proceeds should be paid to the deceased's beneficiaries. John Hancock denied any wrongdoing, but did agree to (among other things) make certain payments to the Florida agencies investigating the issue, to established a dedicated fund to pay identified beneficiaries, and to make

Why Don't Owners Claim Their Money?

Recently, an article by Melanie Payne, the "Consumer Watchdog" of the Southwest Florida News-Press recounted several instances of readers learning of, then claiming, unclaimed property being held by the state.  While we have recounted a number of similar stories, one thing in this article stuck out.  Some of the owners interviewed for the article said that she did not originally pursue the money because she "believed it was a scam." This is a very common problem, and probably one of the main reasons why property goes unclaimed.  Why do some people believe that unclaimed property is a "scam?"  Or, to put it another way, why don't people believe that unclaimed property is real?  There are a number of reasons, including: *  They think that it's too good to be true.   People are naturally disinclined to believe that they will get money for "nothing."  And generally, they're absolutely right.  Unclaimed property, however, is not mone

Washington To Auction Off Unclaimed Property

The Washington Department of Revenue has announced that it will be holding an unclaimed property auction this week, on May 18th and 19th.  Among the items that will be up for auction are pocket watches, silver bars and other items removed from safe deposit boxes that have been left behind by their owners.  Pursuant to the Washington Unclaimed Property Act, safe deposit box items are deemed abandoned if unclaimed "more than five years after the lease or rental period on the box or other repository has expired."  (Rev. Code Wash. 63.29.160).  The Act also gives the Department of Revenue the authority to sell such property, and provides by law that the purchaser of such items "takes the property free of all claims of the owner."  (RCW 63.29.220).  More information concerning the auction can be found at the Department of Revenue's website .

New York (City's) Funds Held By New York (State)

The  New York Post  has an article  by Candice Giove today detailing the significant number of abandoned property accounts that the State of New York is holding for New York City.  According to the article, some of the most cash-strapped agencies have the most apparent outstanding items.  For example, the City Department of Education alone appears to have more than 500 dormant items being held by the state. The article serves as (yet another) reminder that individuals are not the only owners who lose track of their assets.  As we've mentioned earlier , state and municipal governments have their own share of difficulties in getting back unclaimed funds.

Breaking News: Federal Appeals Court Reverses Kentucky Travelers Check Injunction

The U.S. Court of Appeals for the Sixth Circuit released an opinion  today in which it reversed a Kentucky federal court decision preventing Kentucky from shortening the dormancy periods for traveler's checks to seven years  down from 15.  In so doing, the court ruled that the district court erred by not scrutinizing under the legislation under a straightforward "rational basis" standard of review.  Under a "rational basis" standard, a court will not invalidate legislation so long as it is in furtherance of some legitimate government purpose.  In the earlier proceedings, the district court (i.e., the lower court) ruled that the legislation was required to pass a more restrictive standard.  This does not end the case.  The appeals court sent the case back to the district court to consider AmEx's other challenges to the law.  The court did not decide those claims in its prior opinions because it had invalidated the law on due process grounds.

Meet Your Escheator: 10 Questions with Missouri State Treasurer Clint Zweifel

We at Escheatable are happy to announce a new feature on this blog called "Meet Your Escheator," where we will interview state officials responsible for unclaimed property administration. We are happy to have as our first guest Missouri State Treasurer Clint Zweifel .  We've featured several of Missouri's owner outreach programs on this blog (such as Operation Extra Mile , the state's e-mail notification program , and its new unclaimed property kiosks ) and are grateful to Treasurer Zweifel and his staff for their participation. 1.  Escheatable:   Thank you for taking the time to answer these questions.  By way of introduction, can you give us an overview of your background prior to becoming State Treasurer? Had you any experience or involvement with unclaimed property and/or escheat laws prior to that time? Treasurer Zweifel:  Prior to being elected State Treasurer, I served in the Missouri House of Representatives for six years. As the policymaking body for t

A Closer Look at the States' Aggressive Pursuit of Life Insurers & A Programming Notice

Recently, we touched upon a recent settlement  between a life insurance company and the State of California concerning unclaimed life insurance proceeds.  It appears that that settlement was just the tip of the iceberg.  As reported in the Wall Street Journal , approximately 35 states are currently in the process of auditing almost two dozen life insurers regarding their payment of death benefits.  As mentioned in the article, those audits are being conducted by a third-party unclaimed property auditing firm, which, according to the article, may be entitled to collect "a 10.5% cut of the sum turned over to the state."  So, what exactly is this all about? Under the unclaimed property laws of most states, matured or payable life insurance proceeds are deemed abandoned (and thus, subject to escheat) 3 or 5 years after the insurer's duty to pay is triggered.  For example, pursuant to the 1995 Uniform Unclaimed Property Act: [An] amount owed by an insurer on a life or endow