Unclaimed property refers to personal accounts in financial institutions or companies that have had no activity and whose owners have not made contact in three to five years. Specific time periods for unclaimed property vary by state. Types of accounts that can be considered unclaimed property include savings accounts, checking accounts, shares of a company, dividends, insurance payments, certificates of deposit (CDs) and other types of financial accounts.

What States Do With Unclaimed Property

When personal property becomes inactive for over a year, banks, companies and other financial institutions consider it to be abandoned property and report it to the state where the original owner resides. The case is taken by the state's unclaimed property office, which publishes news of the property in local newspapers and on a state-sponsored website with listings of unclaimed property.

At this point, a transfer agent attempts to contact the original owner by sending letters to the person's last known valid address. Notices are typically sent between three to six months before the state takes control of the property. The notice usually gives the original owner 30 to 60 days to respond to the transfer agent. If the owner can contact the agent within the allotted time period, the property is considered claimed and is returned back to the owner.

If the abandoned property isn't claimed by the rightful owner, the state considers it to be unclaimed and holds it for safekeeping until the original owner can be contacted and the property can be returned. At this stage, many states liquidate the property if it isn't already in cash form, such as if it is a publicly traded company's stock. The title of the property still resides with the original owner, and the owner can reclaim it if he can supply original documentation.

States normally take roughly 180 days to review the original documentation. If the state deems the documents to be valid, the original owner has the right to receive the cash value of the property at the time of liquidation. If the property is already liquid, the state returns it to the owner in its original form.

Each state attempts to act in the best interest of consumers and has unclaimed property statutes that protect most properties. Most of these states return property at no cost or for a nominal handling fee.

Keep Personal Property Active

For accounts with financial institutions, it's fairly easy to keep personal property active. Making transactions, withdrawing money or transferring money at least once a year stops the property from being flagged as abandoned.

For shareholders, the process of keeping a brokerage account or shares in a company active is slightly more complicated. To do so, shareholders should vote with a proxy vote, cash a dividend, log into the brokerage account and request information, or make a purchase, sale or transfer.

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