Cashing in on Unclaimed Property

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Efforts to Find Claimants

Osborn at NAUPA sees a greater urgency to try to return this money to its rightful owners at a time when the government is so committed to other fiscal methods to stimulate economic recovery. "Sixteen billion dollars—that would be a very legitimate economic stimulus to get this moving," he says. "You think of everything with the economic crisis going on, what $500 can do for an individual. It helps them make that car payment for that month or an electricity payment. And for some people it will be much more than $500."

As for the billions being held in state treasuries, some states are more active than others in trying to spread awareness of these funds. Using genealogical research to locate owners' heirs, in 2008 the Nebraska Treasurer's Office was able to return one of its biggest claims, for $440,000, to a bunch of grand-nieces and grand-nephews of the original owner, says Osborn. "We're aggressive in giving this money back and we need to be," he says.

The New York State Comptroller's Office is holding $9.9 billion in unclaimed funds as of May 21. Of $569 million received between April 2007 and March 2008, the Comptroller has processed $218 million in claims. Although about 60% of all claims are for less than $100, the largest personal account was for $4 million in stock, which was paid out before the market tanked last year, says Lawrence Schantz, director of unclaimed funds for the Comptroller's Office.

The Comptroller's Office lobbies media organizations such as NBC and Telemundo, the Spanish-language U.S. television network, to run stories to raise awareness of unclaimed funds. In a two-part series that Dateline aired in April, the program's anchor, Tiki Barber, turned out to be among those with unclaimed funds waiting for them in New York State's coffers. Several accounts in Bernie Madoff's name, or the names of his company, Bernard L. Madoff Investment Securities, his wife, or other close relatives are also on the Comptroller's list and have been restricted so they can't be paid, says Vanessa Lockel, a spokeswoman for the Comptroller's office.

Some states with unclaimed property with unknown owners do little more than run annual ads in local newspapers listing the names of new accounts that have been reported by companies, broker-dealers, and banks in the past year.

Delaware, which runs ads in two local newspapers yearly, has returned $109 million of a total of $3.24 billion, or just 3.4%, of the property it has received since 1993, says Patrick Carter, director of Delaware's Division of Revenue. One reason the payouts have been so few is that Delaware is deluged with unknown owner property since 60% to 65% of the Fortune 1000 companies in the U.S. are incorporated in Delaware. State laws require that companies and banks transfer funds for owners with unknown addresses to the state where the company was incorporated at the end of the five-year dormancy period after an account becomes inactive. Delaware doesn't pay interest on property while the state is holding it for owners, even for interest-bearing accounts, says Carter.

The California State Controller's Office had roughly 8.7 million owner accounts worth a total of $5.4 billion at the end of June 2008 and paid out 328,920 claims worth $286.5 million in fiscal year 2007-2008 (ended June 30, 2008). Until August 2007, the Controller was prohibited by law from sending notification to more than 20% of owners alerting them to money the state was holding for them. Now the state notifies 100% of the owners, and even informs them of money being held for them by companies before it's transferred to the state, says Holly Jordan, a spokeswoman for California's Controller's office.

Companies are getting smarter about unclaimed money, too. Many are establishing separate gift certificate companies in states such as Virginia, Ohio, and Arkansas that don't require unclaimed gift certificates to be transferred to the state where the parent company is incorporated. "So companies get to keep the difference," says Carter in Delaware. "The amount of gift certificates we receive has dropped dramatically."

Michael Schilken, an estate and trust attorney at Husch Blackwell Sanders in Omaha, is petitioning the Nebraska probate court to have two estate cases reopened to administer property not included in the initial probate but now being held by the state. In 19 years of legal practice, he's never represented this kind of case. This tells him that people have become much better informed about financial matters, and the state of the economy may be one impetus for that.

While it's always worthwhile for people claiming money listed in their own names to go after it, heirs of deceased owners need to consider the amount they're trying to recover, says Schilken. Since in most cases they'll need to hire a lawyer to represent them and petition to have the owner's probate case reopened, he believes it's only worth it for accounts with around $10,000 or more in them.

In years past, most people's conception of unclaimed property was a $20 rebate check that was never cashed that they assumed disappeared or was pocketed by the state. "I think the understanding of unclaimed property in the last five years has improved a lot," in part due to Web sites such as www.missingmoney.com that allow people to search for money by name, Schilken says. "People are paying more attention to their own finances and are just more curious and searching for financial information and this is just another piece of it."

Bogoslaw is a reporter for BusinessWeek's Investing channel.

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