Unclaimed Property: What Are You Missing?

Many people do not understand the concept of unclaimed property. There’s often confusion about what it is and how the rules work. To help you out, we’ve listed a few frequently asked questions about unclaimed property. Read on. 

Why should you care about unclaimed property?

Unclaimed property is any intangible asset owed by a company to an unrelated party who has not claimed it for a certain time. When a company holds onto a property for the statutorily required amount of time without hearing from the owner, it becomes susceptible to escheat. The holder, in this case, the company, is then required to disclose the property to the relevant state. For an average consumer, unclaimed property can be a valuable source of extra money.

Which state can claim unclaimed assets?

The U.S. Supreme Court has issued rules for determining the state where a business must report its unclaimed property. The first-priority rule states that unclaimed property goes to the state where the apparent owner’s last known residence is recorded on the holder’s records. If the apparent owner’s residence is unknown, the unclaimed property goes to the holder’s state of incorporation (or state of legal domicile) according to the second-priority rule.

What type of assets are considered unclaimed property?

Unclaimed property can be of various types, including uncashed payroll checks, vendor checks, and accounts receivable credit balances. However, other forms of unclaimed property are industry specific – these include uncashed royalty checks and unused gift certificates/gift cards. States are now catching up to the times by redefining their statutes to include virtual currency as a form of unclaimed property.

What can you do?

First, people should inspect their possessions for any uncashed checks, gift cards, or other items they might have overlooked. It takes less time to cash them yourself than to apply for state help once they have been recorded as unclaimed property.

Businesses should review their compliance history to determine if they may be holding unclaimed property. Remember that making a claim might place your business on the state’s radar and expose it to audit risk. Before submitting a claim to the state, verify that your business is compliant.

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The content of this article is for informational purposes only and should not be relied upon since it is subject to change.