According to state law, financial institutions must release property to the state comptroller’s office after three years of no contact with the owner and unsuccessful attempts to contact them. Funds are held in a trust while searching for owners.
“States generally hold no more than a fourth of the unclaimed funds to pay back potential owners coming to reclaim their money,” said John Coalson, partner in Alston & Bird’s Unclaimed Property Group. “The rest of the money is fed into a state’s general fund and used to pay the states bill, often for education, state employees’ salaries and transportation.”
As explained by Coalson, “Technically, they will repay it if owners come forward to claim it, but they rarely come forward after – and states treat it as theirs.”
Coalson noted that unclaimed property is increasingly an important revenue resource for states.
“They love money,” he said. “And it’s becoming an increasingly important revenue source for the state.”
Previously, auditors required a returned mail posting to determine property was unclaimed, said Coalson, but now the only requirement is often three years of no activity on a person’s financial account.
“It’s not sustainable,” he said, “This could well be a highwater mark.”