CandleFocus Glossary Editor
Unclaimed Funds are assets or property that stand dormant and abandoned due to the inability of the rightful owners to identify themselves and make a claim on it. Unclaimed Funds or assets can take many forms, including bank accounts, security deposits, un-cashed checks, insurance refunds, and wages. Commonly, when accounts become dormant—meaning that the owner does not respond to attempts to reach out—the assets eventually become unclaimed funds.
In order to ensure the rightful owner can eventually reclaim unclaimed funds, many states have established a way to vacate assets. Most state laws dictate that financial institutions, such as banks and securities dealers, must transfer funds to the state after a certain length of time. That time period is designated as the 'dormancy period' as it applies to unclaimed funds, and is usually a period of anywhere from one to fifteen years, depending on the type of account (i.e., an unclaimed bank deposit is typically vacant sooner than an unclaimed security deposit).
Once the assets are remitted to the state, they are held in trust until they are eventually claimed by the owner or their descendants. Each state typically has a centralized department or office of Unclaimed funds that keeps a registry of unclaimed property. The registry is comprised of information on individuals and entities who may have unclaimed property or funds livable to them. The registry gives the requisite descriptions to identify the asset (such as a bank account number or security deposit amount) and the owner who holds the right to reclaim the unclaimed funds.
To reclaim unclaimed funds, the legal owner must first contact the department or Unclaimed Property Office in the state where the property is held. They must then prove their legal ownership of the funds or asset. This is usually done by supplying identification, documented proof of their original claim to the fund (such as an old tax return or bank statement), and sometimes even a death certificate. Once the rightful owner is identified and their claim verified, payment for the unclaimed funds is either transferred to an account designated by the owner or mailed to the address that is provided.
One important thing to keep in mind is that while many unclaimed funds are not taxable, if the funds have grown in value due to appreciation or other factors, they may be taxed as ordinary income when they are claimed. So it’s a good idea to consult a qualified tax advisor or accountant when filing a claim.
Also, keep in mind that laws governing unclaimed funds and dormant accounts may vary by state. It’s important to familiarize yourself with the laws in your state in order to better understand the type of asset or account that triggers dormancy, the length of the dormancy period, and any possible tax implications. Claiming unclaimed funds is typically a very straightforward process, so it pays to do some research beforehand.
In order to ensure the rightful owner can eventually reclaim unclaimed funds, many states have established a way to vacate assets. Most state laws dictate that financial institutions, such as banks and securities dealers, must transfer funds to the state after a certain length of time. That time period is designated as the 'dormancy period' as it applies to unclaimed funds, and is usually a period of anywhere from one to fifteen years, depending on the type of account (i.e., an unclaimed bank deposit is typically vacant sooner than an unclaimed security deposit).
Once the assets are remitted to the state, they are held in trust until they are eventually claimed by the owner or their descendants. Each state typically has a centralized department or office of Unclaimed funds that keeps a registry of unclaimed property. The registry is comprised of information on individuals and entities who may have unclaimed property or funds livable to them. The registry gives the requisite descriptions to identify the asset (such as a bank account number or security deposit amount) and the owner who holds the right to reclaim the unclaimed funds.
To reclaim unclaimed funds, the legal owner must first contact the department or Unclaimed Property Office in the state where the property is held. They must then prove their legal ownership of the funds or asset. This is usually done by supplying identification, documented proof of their original claim to the fund (such as an old tax return or bank statement), and sometimes even a death certificate. Once the rightful owner is identified and their claim verified, payment for the unclaimed funds is either transferred to an account designated by the owner or mailed to the address that is provided.
One important thing to keep in mind is that while many unclaimed funds are not taxable, if the funds have grown in value due to appreciation or other factors, they may be taxed as ordinary income when they are claimed. So it’s a good idea to consult a qualified tax advisor or accountant when filing a claim.
Also, keep in mind that laws governing unclaimed funds and dormant accounts may vary by state. It’s important to familiarize yourself with the laws in your state in order to better understand the type of asset or account that triggers dormancy, the length of the dormancy period, and any possible tax implications. Claiming unclaimed funds is typically a very straightforward process, so it pays to do some research beforehand.