Forex Articles

Have you ever heard the term escheat? It refers to the transfer of property (including funds) to the state when someone dies without a will or known heirs, or when someone simply moves and the state cannot locate the owner. Escheat could rob you of what is rightfully yours if a distant relative dies without your knowledge or even if you move and forget about a checking, savings, IRA or 401(k) account you left behind. (For more, see Unclaimed Assets: How to Find Them.)

Thanks to a recent Supreme Court decision not to hear a case based on a California law that shortened the period for establishing assets as unclaimed from 15 years to three years, escheat law is in the news. The history of the case in question was complicated, making it, in the court's opinion, a bad candidate for appeal. Justice Samuel Alito, however, indicated a future (better) case could cause the California law to face a serious constitutional challenge.

The California law, similar to revised escheat laws in many states, stipulates that if you have ownership or inheritance rights to a bank account, insurance payout, safe deposit box or land – but fail to exercise them within three years of the property being deemed unclaimed – it could be officially transferred to the state. (For more, see Understanding Property Deeds.)

Newer escheat laws, such as California's, place minimal requirements on the state to attempt to notify potential heirs or owners about the existence of these property or funds. The combination of a shorter time frame for declaring funds abandoned or unclaimed, and minimal notification requirements, inspired Justice Alito's comments regarding future cases.

California is only one of many states that have shortened time frames and otherwise made their escheat laws weak when it comes to due process. The Council on State Taxation periodically publishes a state-by-state scorecard on unclaimed property statutes; the most recent scorecard was published in 2013.

A quick check of the scorecard will reveal whether your state is top-ranked along with Massachusetts, Virginia, Illinois, Indiana, North Carolina and Wisconsin, all of which received a grade of A or A-. Perhaps your state sits near the bottom, thanks to shortened time frames, minimal notification requirements and so forth. Bottom dwellers include Delaware, Mississippi, New York and Alaska, each with a grade of D-, as well D recipients California, Louisiana and five others.

If you wonder why states would make it difficult to citizens to collect what is rightfully theirs, the answer is revenue. Collectively, states hold almost $42 billion in unclaimed assets, which is a potential windfall for state governments if the rightful owners don't show up.

The funds and property can be in almost any form, although according to the National Association of Unclaimed Property Administrators (NAUPA), the majority are in cash accounts worth less than $100.These accounts include lost 401(k)s, IRAs, taxable investment accounts, life insurance benefits and uncashed traveler's checks to name just a few.

There is no central database that lists all unclaimed funds and their s. One good place to start is NAUPA's Missing Money website; all but 11 states participate in the Missing Money database. NAUPA also has a site called Unclaimed.org that can be a re in finding funds, such as U.S. Federal Income Tax refund checks, unclaimed funds from the Pension Benefit Guaranty Corp. and more.

Typically, funds are unclaimed because relatives lose contact with each other or, more often, because individuals don't keep good records of accounts they have opened. Poor estate planning is another cause of lost money. If you, or your heirs, don't know where the property or accounts are, no one will know whom to contact in order to gain access to those assets. (For more, see 6 Estate Planning Must-Haves.)

In addition to staying in touch and completing estate plans, you can keep track of assets through simple habits like writing down the names of all accounts and account numbers, conducting at least one transaction or interaction with each account per year and providing the Post Office with a forwarding address when you move can.

Even if you believe you have no unclaimed funds, verify your status by visiting the aforementioned websites. You may be surprised at the treasure you uncover. Be sure to check all states in which you or family members have lived. Search all databases that may apply, including those that may be longshots. Do this for all members of your family and in the names of any who have died, especially recently.

Shore up your own records by following the suggestions above, and update your records annually. Finally, if you locate missing funds, claim them. The process usually isn't lengthy, and the reward isn't just free money – it's money that was yours all along.