Definition
The term unclaimed property refers to certain assets that have been turned over to a state agency when a financial institution can no longer contact its owner. Unclaimed property is held by the state agency until the original owner, or an heir, claims it.
Explanation
Also known as abandoned property, unclaimed property results when a financial institution, or public company, is no longer able to contact the owner of an asset. Unclaimed property typically results from poor recordkeeping. For example, the owner of a money market account may move to a different state and forget to provide a forwarding address to the bank. If the bank cannot locate the owner, the money will be turned over to a state agency for safekeeping. The rules vary by state, but one or two years of inactivity typically occurs before property is classified as unclaimed or abandoned.
The list of unclaimed property is extensive, and can include: annuities, bonds, cash, certificates of deposit, checking accounts, common stock, contents of safe deposit boxes, life insurance policies, mutual funds, paychecks, savings accounts, security deposits, trust distributions, uncashed checks, and uncashed dividends. The contents of safe deposit boxes are typically sold at auction and the proceeds held as the unclaimed property.
While most states will hold onto property indefinitely, others may claim it as their own after an extended period of time. Claims can be made by the original owner of the asset as well as their heirs.
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