The topic of unclaimed property has been cropping up in conversations a lot lately, at least in the conversations that I hear. Unclaimed property refers to anything that sits in an account without activity for a period of three to five years, depending on your state, and is then seized by said state. Land and other property are included in this; however, money is usually the most commonly seized property.

Let me be clear about something, your bank DOES NOT set the guidelines for this. The rules and timetable for unclaimed property are determined by the states, and banks are required to comply with that. I know there are certain policies that banks have that we question, even me, who works in the industry. However, this one is out of our hands.

Here’s how it works. If an account held at the bank – checking, savings, CD, etc. – has no activity for one year, the account goes dormant and the accountholder is sent a letter every three months reminding them that they have an account. The letters are sent because they are system generated and audited by regulators to ensure compliance. We have no way of getting out of that without a large fine and trouble coming our way – this kind of thing affects banks’ ability to merge and credit unions’ ability to keep their charters. However, customers claiming they never received the letter always argue first that we never sent it.

In truth, what probably happened was the customer didn’t think it was anything important and threw it with the junk mail. Other things affect whether or not a customer receives the letter, like an incorrect address or a move. If we don’t have updated information, the letter we send could be returned to us, in which case the account is flagged. But, the bottom line is we send the letters. Accounts in dormant status are easily remedied by making a deposit or withdraw, something to indicate that the account is being used.

Depending on the state you live in, the next time frame is three to five years. At three or five years, a dormant account will become inactive and the money will be escheated to the state it resides in. The state can then use the money as they see fit, which is usually towards their budget. Most states will allow you to reclaim your money, though, so don’t panic. You will have to fill out a form, prove you are entitled to the money, and then pay a processing fee in most cases; however, you can get your money back.

If you’ve never checked on any unclaimed property in your name, you may want to have a look. Cash-strapped states are reducing the time before they can seize the money, so many that were at five years are now taking money at three years. Some states have a statute of limitations on when funds can be claimed by their original owners. That means, if the state’s statute of limitations is four years, you have four years from the time they take the money to claim it, or it legally becomes theirs. I don’t know the laws for every state, so it’s best to check the website for the state agency that handles that within your state.

Now, when a bank is required to relinquish money to the state, another letter is sent out notifying the customer that this has taken place. Again, the letters are sent by regulation and the process is audited to ensure compliance. If a customer claims they didn’t get the letter, it most likely wasn’t due to an error by the bank. It is the customer’s responsibility to make sure their banks have the correct information on file for them to avoid any problems with mail. And, if you get something from your bank, it may be a good idea to at least glance at it before tossing it into the rubbish bin.

It’s important to note that there are a lot of companies out there who claim that they’ll find your missing money for you, for a fee. It’s not much, but they’ve also go your credit card number now, too. Those companies are scams. Reclaiming your money is free (minus the admin fee, which you would pay on top of the scam company’s fee) and I can tell you exactly where it is, with the state. No one else gets to seize your property – unless you’ve been levied by the IRS and that’s a different story.

If you want to check out whether or not you have unclaimed property, start with http://unclaimed.org. This site lists all state agencies that claim property by state, so you can find out where you need to go from there. When you get to your state’s website, you’ll be able to search by your name and get the directions on reclaiming your property.

So, anyone have any unclaimed property? Have you had your bank accounts escheated before? Did you go to the bank, hopping mad, demanding to know why they gave your money away?

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