Beware of giving up financial assets to the state - 6/6/2017

A friendly warning: Don’t unknowingly give your property to the state.

Common law in the United States includes a process in which unclaimed property is turned over to states. The intent of this process, called escheatment, was to ensure that property would be properly cared for if the owner died and heirs were not apparent.


Once property is turned over to the state, it is usually sold and the funds are put in the state coffers. Unclaimed or abandoned property includes dormant brokerage and bank accounts.

Why should you be concerned about escheatment? In the past, most states had a relatively long period before an account was declared abandoned. This typically has been five years but ranged up to 30.

Florida’s dormancy time periods are still five years for most assets except paychecks, tax refunds, gift certificates, bond principal and credits. The time on these can be as short as one year.

Recently, a number of states shortened the time before accounts or property are declared inactive or abandoned. Some states, including New Jersey, Kentucky and South Dakota, have periods as short as three years for some financial assets. This includes savings and brokerage accounts, safe deposit box contents, bond principal and checks.

Florida’s dormancy time periods are still five years for most assets except paychecks, tax refunds, gift certificates, bond principal and credits. The time on these can be as short as one year.

To avoid having an asset declared abandoned or inactive, activity must be shown. For example, cash paychecks, and use credits and gift certificates within a year. For investments, bank or brokerage accounts, advise companies of any address changes, respond to correspondence, make transactions and vote on shares. All of these actions show that the account has not been abandoned.

In Florida, companies are required to attempt to contact account holders or people who have been issued checks or credits over $50 when the dormancy period is upcoming. At the least, they will try to contact people at the last known address. If the account has a beneficiary, such as IRAs or insurance policies, they also must try to contact them. This is why it is important to keep all accounts up to date.

In Florida, companies are required to attempt to contact account holders or people who have been issued checks or credits over $50 when the dormancy period is upcoming. At the least, they will try to contact people at the last known address. If the account has a beneficiary, such as IRAs or insurance policies, they also must try to contact them.

If the company cannot confirm that an account is active, it must report it to the state and start to transfer the asset. If you feel you have property that has been declared abandoned or unclaimed, investigate it through fltreasurehunt.org.

Here are a few ways to avoid having an account go dormant or be declared abandoned:

  • Keep account information up to date, including addresses, beneficiary designations and contact information.
  • Make sure family members or a trusted adviser know the locations of your accounts, insurance policies and other assets.
  • Respond to correspondence from banks, brokerages, the IRS and other institutions. Add others to the notice list so they will be contacted if you do not respond.
  • Cash all checks, deal with bond redemptions and insurance proceeds, and use credits within one year.
  • Don’t let savings or checking accounts sit idle. Perform at least one transaction a year.
  • Vote your stock share, insurance or other investment proxies.
  • Consolidate accounts when possible to reduce the time spent keeping up to date.


Keeping track of assets is one part of managing finances. Make updating all accounts, policies and financial assets part of an annual review. This will ensure that you, or a beneficiary, do not give up ownership.

Don’t inadvertently give away something to the state.

Tom Roberts, CFP® is president and financial planner with A New Approach Financial Planning in Lakewood Ranch.  He can be reached at 941-927-9590.  Article originally published in The Bradenton Herald on June 6, 2017.

Rate this blog entry:
Use your tax forms to boost finances - 4/11/2017
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Tuesday, 17 October 2017
If you'd like to register, please fill in the username, password and name fields.
16 June 2017
Bradenton Herald Articles
A friendly warning: Don’t unknowingly give your property to the state.Common law in the United States includes a process in which unclaimed property is turned over to states. The intent of this process, called escheatment, was to ensure that property...
24 April 2017
Bradenton Herald Articles
With the 2016 federal tax return filing deadline of April 18 – yes, that is correct – rapidly approaching, let’s talk about how you can use your tax forms to improve your finances.Before you file away your 2016 tax forms, spend a few minutes to see h...
15 March 2017
Bradenton Herald Articles
When investing and managing your money, you must consider and deal with a number of potential risks. These include general market moves, individual company, interest rate, inflation, default, political, currency, liquidity, volatility and others.Some...
11 December 2016
Bradenton Herald Articles
Everyone should own bonds or bond-like investments, though you might ask why would anyone want to own bonds at this time. Interest rates are going up and the math says the financial value of bonds will decrease. The value in owning bonds is...