A dormant account is a financial account that has had no activity for an extended period of time. Activity normally refers to transactions such as deposits, withdrawals, or transfers. Although dormant accounts do not have any active transactions, they may still be generating interest or dividends. After the dormancy period, as set up by state law, accounts are considered as unclaimed property and it is up to the state to take possession of them.

Different states have different rules concerning dormant accounts, such as how long before an account is considered dormant, activities that can prevent dormancy, and the rules for claiming the funds. The length of the dormancy period can vary by type of account, financial institution, and state. In some states, for example, the period for a savings or checking account is three years of no activity; for a brokerage account, it may be up to five years.

Reasons inactive accounts become dormant usually involve:

1. A change of address by the account holder and not giving the financial institution a forwarding address. 2. A death or disability of the account holder 3. Forgetting about the account 4. A lack of interest or need for the account 5. A change in economic circumstances.

It is important for account holders to keep up with their accounts and to contact their financial institutions when they are moving, becoming disabled, or even when they are no longer in need of the account. Otherwise, the account may become dormant and the funds will be turned over to the Unclaimed Property Unit in the state in which the financial institution is based.

In order to reclaim these funds, the account holder must file a claim to prove their identity. Some states require more proof than others, with the claimant providing such things as Social Security numbers, birth certificates, and other forms of identification. The rules and regulations may differ depending on the type of account, state laws, deadlines and other considerations.

Therefore, it is important for account holders to keep track of their accounts or to transfer their funds to another institution or person. This will ensure that the account does not become dormant and the funds do not become unclaimed property of the state and thus, unretrievable.