With one year before its deadline, discussions on an upcoming meeting of the Uniform Law Commission’s (ULC) drafting Committee to Revise the Uniform Unclaimed Property Act are expected to focus on issues with unclaimed property holders and state administrators.
Kendall Houghton, leader of Alston & Bird’s Unclaimed Property Group, said the drafting process for the Revised Uniform Unclaimed Property Act (RUUPA) is at the halfway point, based on the standard timeline from the ULC, which generally sets a two-year window for revisions.
“To the extent that the ULC or the drafting committee feels that its mission is impossible to accomplish in the 12 months, I certainly hope they will consider extending the time to complete the project,” said Houghton.
Houghton said the committee reporter, Charles Trost, has raised the doctrine in his prefatory note to the draft revised RUUPA, where he lays out various questions addressing the scope of the doctrine and whether there are instances in which states may disregard contractual provision in certain property.
The fact that Trost has raised those questions, she said, “is a pretty good hint that the reporter feels they are critical issues but that he has not concluded or has not yet recommended the appropriate handling of the derivative rights doctrine.”
“This is very much a discussion that is continuing, and I can assure you that it is going to be revisited because it is an issue that both state and holder representatives feel incredibly strong about and have diametrically opposed views,” said Houghton.
Houghton highlighted the handling of an unclaimed property with a foreign owner and a foreign address as another major issue facing the drafting committee.
“I would say that most unclaimed property attorneys who represent holders view the foreign commerce clause and a number of other constitutional limitations as preventing states from escheating foreign property,” she said.
Houghton added that a lot of work has gone into how to deal with unclaimed securities but because of its complexity, all sides will continue to provide input on various issues.
Houghton also said questions regarding how to address life insurance and when the use of the Death Master File is appropriate for showing proof of abandonment were raised during the first reading of the draft and will likely be raised again. She also noted questions as to whether the RUUPA is the appropriate avenue to regulate life insurance products, especially because the National Conference of Insurance Legislators is working on a separate effort to draft model regulations for the life insurance industry.