Some Thoughts on Unclaimed Property Asset Recovery
An often overlooked aspect of unclaimed property law is the fact that most unclaimed property holders are also unclaimed property owners. The same data glitches, human errors, and industry practices that result in a company holding unclaimed property can also lead to that company’s unclaimed property being held by the state. If you are looking to get that money back, here are some considerations for undertaking a corporate unclaimed property asset recovery program.
1. You Have to Look
The first step in recovering unclaimed property is to look for it. While some states make meaningful outreach efforts to get unclaimed property back into the hands of owners, not all do. Companies should not assume that unclaimed property will be brought to their attention by the state. Instead, companies should affirmatively look for unclaimed property in each of the states where it has a payment address or significant footprint. Searches can usually be conducted for free through the website of the applicable state’s unclaimed property program. A link to the unclaimed property programs for all 50 states is available from the National Association of Unclaimed Property Administrators, an affiliate of the National Association of State Treasurers.
2. Don’t Forget About Your Past
Some unclaimed property is caused by merger, acquisition, and reorganization activity. The closing or moving of corporate offices, change of company names, or personnel restructuring efforts can all lead to unclaimed property. Checks can be sent to closed offices. Transactions can fail to reconcile because they are in the “wrong” name. Payments can be returned because a new employee does not know what the payment is for or how to apply it. Accordingly, when searching for unclaimed property, don’t just search under the company’s current name at its current address. Search for assets held under former names, for items belonging to corporate predecessors, and in states where the company used to have offices.
Also, keep in mind that the information on the state’s search website is the information provided by the holder during the reporting and delivery process. So, when performing searches, think about what your customers call your company. For example, if you work for the Amalgamated Business Company of Delaware, but your customers all call you “ABCDE,” make sure you check that name. Similarly, if you have a prominent, well-recognized product or brand name that is not necessarily your corporate name but is often used by customers, be sure to check that as well.
3. It’s Not As Hard As You Think
Once unclaimed property has been located, the next step is to file a claim. This process is usually straightforward if the funds are held in the current corporate name and address. Many states allow claims to be filed via the state website, or through an online form supported by additional documentation. These forms are generally short, self-explanatory, and can generally be done in minutes. If you do decide to engage a finder firm, make sure that there is a written agreement specifying precisely the scope of the finder’s authorization, whether the company retains the right to file its own claims, and the length of time the finder’s authorization is valid.
4. Get Your Docs In A Row
In addition to the claim form, the owner will generally need to provide additional documentation in support of the claim to establish the owner’s identity, the address of record, the relationship with the holder, or that the corporate employee filing the claim has authority to do so. For some types of property, additional information may be required. For example, if the property is dormant account assets escheated by a bank, the state will generally ask for a copy of an account statement or other correspondence from the bank that has the account number.
Things become more difficult where the owner’s name or address does not match the information reported to the state. This is a common occurrence; indeed, it may be the reason that the property never made it to the owner in the first place. Keep records reflecting old corporate names and addresses – These can come in handy when attempting to claim property owned by a corporate predecessor or a payment associated with a former address.
While searching for and recovering unclaimed property may be looked at as yet another thing for busy professionals to track and address, it is one of the few compliance initiatives that can actually result in the company receiving, rather than paying, money. A modest investment of resources can often pay for itself.