By Bo Garner, CPA, MBA

It’s surprisingly common for financial assets to become lost or forgotten – over $70 billion in unclaimed property is currently waiting to be claimed by its rightful owners. According to the National Association of Unclaimed Property Administrators (NAUPA), approximately one in seven people, or 33 million individuals, currently have assets held by the state. These can range from uncashed paychecks and dormant brokerage accounts to other financial assets that have slipped through the cracks.

For individuals, businesses, and nonprofit entities, understanding how to uncover and claim these funds is crucial. The journey to reclaiming assets starts with recognizing what qualifies as unclaimed property and knowing where to look.

What is Unclaimed Property?

Unclaimed funds are financial assets that have been forgotten or left unclaimed by their rightful owners. These can range from bank account balances, stocks, uncashed dividends, to insurance policy proceeds and utility security deposits. It does not include real estate or vehicles. Some of the most common unclaimed assets include:

  • Checking or savings accounts, where balances remain untouched.
  • Investment instruments such as stocks, bonds, or brokerage accounts that have been neglected.
  • Life insurance proceeds that beneficiaries are unaware of.
  • Dividends and interest payments that have not been cashed in.
  • Gift certificates that have never been redeemed.
  • Uncashed checks, including payroll, rebate, or refund checks.
  • Contents of safe deposit boxes, which can include tangible personal property of value.
  • Annuity accounts or payments that have not been claimed.
  • Escrow or trust accounts or distributions that have not been disbursed to the rightful owners.

How Funds Become “Lost”

Assets turn into unclaimed property due to reasons like changes in address, name, or simple forgetfulness, with a dormancy period of one to five years before being handed over to the state. State governments then take on the task of managing these funds, employing various means to reunite them with their rightful owners.

How to Claim Unclaimed Property

State governments have made significant efforts to streamline the reclaiming of forgotten or overlooked assets for both individuals and businesses. By creating user-friendly online platforms, these states ensure that searching for and claiming unclaimed property is transparent and available without incurring a service fee. Moreover, customer service assistance is typically available.

To initiate this process, individuals or businesses can visit the National Association of Unclaimed Property Administrators website or the specific unclaimed property website of their state. A straightforward entry of a name – be it of an individual, business, or nonprofit – into the system will promptly reveal any assets that are waiting to be claimed. Given that databases are continually updated with new properties, it is prudent to perform these searches on an annual basis, ensuring no potential claim is overlooked. For state-specific inquiries:

  • Maryland: With $81 million returned to its rightful owners in 2023, the Comptroller of Maryland’s Unclaimed Property Program allows for easy searches using basic information. Maryland complements its digital efforts with proactive steps to identify and notify owners of unclaimed property, including mailing campaigns and public awareness efforts.
  • North Carolina: The NC Cash Program stands ready to assist residents in claiming a portion of the nearly $1.3 billion in unclaimed property. Managed by the Department of State Treasurer, it features an online search platform. By entering a name or business name, North Carolinians can identify any assets owed to them. The state also actively promotes awareness of unclaimed property through public service announcements, social media campaigns, and event participation.
  • Virginia: The Virginia Unclaimed Property Program, overseen by the Department of the Treasury, has returned over $1 billion to residents since 1961. Emphasizing that one in four Virginians might have unclaimed property, the state provides free online search tools and conducts extensive outreach through direct mail and public events to inform and assist citizens in the claim process.

Taxes and Unclaimed Funds

While finding unclaimed funds can feel like a financial windfall, it’s important to consider the tax implications, depending on their nature and the amount. Property such as capital gains from stocks and interest income from investment vehicles will likely become sources of taxable income; however, other income sources like municipal bonds and some retirement plans may be tax-exempt. It’s advisable to consult with a CPA to understand any potential tax liabilities or benefits related to reclaimed assets.

Special Considerations for Nonprofits

Nonprofit organizations, much like individuals and for-profit businesses, have the opportunity to reclaim forgotten or overlooked assets through a similar search process for unclaimed funds. To ensure a comprehensive search, nonprofits should consider every state in which they have been actively involved. This encompasses states where the organization is legally registered, where it operates programs, conducts fundraising activities, or engages in significant financial transactions.

In addition to reclaiming assets directly related to the organization, nonprofits have a unique opportunity to leverage unclaimed property searches as a novel fundraising strategy. By encouraging their supporters to conduct searches for any unclaimed property in their names, nonprofits can suggest these found assets be donated as a contribution to the organization. This approach not only helps individuals reconnect with assets they were previously unaware of but also provides a distinctive avenue for boosting the nonprofit’s fundraising efforts.

Frequently Asked Questions (FAQ)

How often should I check for unclaimed funds?
It’s wise to conduct a search annually. The dynamic nature of state databases, along with the addition of new funds, means that opportunities to discover assets are continually arising.

Can unclaimed funds be claimed by heirs?
Absolutely. If a family member or loved one has passed away, leaving behind assets that have turned into unclaimed property, heirs can step forward to claim these funds. States recognize the rights of heirs to inherit unclaimed assets, provided they can submit the necessary documentation to prove their entitlement. This process ensures that unclaimed property finds its way to the rightful beneficiary, even after the original owner’s death.

What documentation is needed to claim unclaimed funds?
Claimants typically need to present a valid ID, proof of address, and documents establishing their connection to the funds. For heirs claiming on behalf of a deceased relative, documentation might include a death certificate, will, or other legal papers that verify their right to the assets.

Is there a deadline to claim unclaimed funds?
While most states hold unclaimed funds indefinitely, it’s advisable to claim them as soon as possible. This approach helps avoid potential complications and ensures that the funds are returned to their rightful owner or heir without unnecessary delay.

How can businesses and nonprofits manage their assets to prevent them from becoming unclaimed?
Businesses and nonprofits can mitigate the risk of their assets becoming unclaimed by regularly updating their contact information with financial institutions and maintaining thorough records of all transactions and asset holdings.

If you have any additional questions about unclaimed property or need help with the process, contact Bo Garner, Leader of PBMares’ Not-for-Profit group.