Not content with holding $32 billion in unclaimed property in trust while tapping the interest, some states are aggressively seizing property that isn’t really unclaimed and using it to balance their budgets.
Carla Ruff of San Francisco found her safety deposit box had been drilled, its contents seized and turned over to the State of California marked “owner unknown”—even though she had a checking account at the bank and regularly paid for the box. Important paperwork needed because her husband was dying had been shredded, and her great-grandmother’s heirloom jewelry had been auctioned off for about 2% of its value.
Bank of America is “deeply regretful.”
Banks and other businesses are supposed to turn over unclaimed property to the state for safekeeping. Less than one-fourth is ever returned to its rightful owners. California stopped sending notices to owners, dumped the money into the general fund rather than a special trust fund—and spent it. Last year, courts issued injunctions to keep it from seizing any more property until it made reforms.
California is not the only state to be criticized for its handling of unclaimed property. In Delaware, unclaimed property is the third largest source of state revenue. Idaho just passed a law saying that the state can permanently keep all property not claimed with 10 years. All states pay commissions of 10–12% to contractors to locate and seize accounts (Elisabeth Leamy, ABC News 5/12/08).
Some suggestions for protecting yourself:
Contact your bank or brokerage firm at least once a year in a way that leaves a paper trail—say by making a deposit or a withdrawal. Vote stock proxies occasionally. Write a list of all accounts and keep it with your will so your heirs will know where to look. Insure valuables kept in a safety-deposit box. For help in searching for unclaimed property you may own, contact the National Association of Unclaimed Property Administrators, or visit www.missingmoney.com.
The state might escheat your property if two statements are returned as undeliverable by the U.S. Postal Service, so pay attention to whether you receive your statements.
I guess the safest safe-deposit box is still a mattress!
Really scary. I’ll take my chances with a cookie jar.
I hope she sues the bank and state roally!
In Wisconsin, Gov Jim Doyle (D) took $200,000,000 from the Injured Patient and Family Compensation Fund to help balance his budget. This is money all state physicians and hospitals throw in to maintain a balance of $800,000,000 to pay medical malpractice awards. This covers true injuries without everyones malpractice insurance going thru the roof.
The Wisc Medical Society will spend the next “10 to 12 years” in court to recover the money, with interest. They will probably win, but Gov. Doyle will be retired by then. At least the Medical Society can actually say they are doing something other than playing concerned bureaucrates.
Government abuses are rampant and this is one more example. I’ve always wondered why and how state governments rationalize the seizing of “unclaimed funds”. Who appointed government to that job? It seems to me it would better remain with the people to manage between themselves. Government spends everything it can get its hands on, justified or not. I’m from Idaho and wasn’t aware of the new ten year limit on holding unclaimed funds. If they remain unclaimed they should belong to the business that was holding them not the government.
This is really unnerving. Cookie jar, matress, whatever… Bank of America sucks anyway!