A version of this advisory was first published by Tax Notes State (subscription required) on August 24, 2026.
On April 16, 2026, the Safeguarding Americans’ Fairly Earned Retirement (SAFER) Act of 2026 (H.R. 8338) was introduced by U.S. Representatives Sam T. Liccardo, D-CA, and Michael Lawler, R-NY. The impact of this bill rippled across the unclaimed property industry, as congressional incursion into matters of state unclaimed property law is exceedingly rare. Congress last directly addressed this area in 1993, when it enacted legislation governing the escheat of certain money orders, traveler’s checks, and similar instruments. Holders and unclaimed property practitioners welcomed the proposed legislation, which aims to provide relief from aggressive state laws and practices around the escheatment of securities (such as stocks, mutual funds, and brokerage accounts). For example, the Unclaimed Property Professionals Organization supported H.R. 8338 in a June 24, 2026 letter to the cosponsors.
Background on Escheatment of Securities
There has been a trend among states over the last several years to revise their unclaimed property laws to escheat securities based only on shareholder inactivity. That could mean the shareholder has not logged into their account, cashed a dividend check, or otherwise corresponded with the holder regarding their shares. See, e.g., Fla. Stat. section 717.1101 (amended by Fla. H.B. 989 in 2024). This is a clear departure from the 2016 Revised Uniform Unclaimed Property Act (RUUPA), which provides for a returned mail (RPO)-based dormancy standard. In particular, a security under RUUPA does not escheat unless the holder receives RPO from at least one first-class mailing to the accountholder.
RUUPA also requires holders to communicate with an account owner by email if the owner elects not to receive first-class mail. Only 13 states have adopted RUUPA, and even some of those have deviated from the traditional provision by incorporating inactivity concepts. One example is Illinois, which has adopted a securities provision that results in escheatment upon the earliest of (1) RPO plus three years, (2) the date of last contact plus five years, or (3) the date of the owner’s death plus two years. See 765 ILCS 1026/15-208.
Many states have also interpreted their securities dormancy standards in audits or other informal administrative proceedings to not require RPO, even if the statutory language suggests that RPO is relevant. See, e.g., Complaint, The Investment Company Institute v. Yee, No. 34-2021-00310039-CU-MC-GDS (Cal. Super. Ct. Oct. 22, 2021). Other states have outdated or ambiguous laws that do not expressly include securities held within a brokerage account in the scope of the securities dormancy provision. See, e.g., Cal. Code Civ. Proc. § 1516. That has given states the opportunity to assert that brokerage accounts do not receive the same treatment as shares held directly with an issuer even though the underlying property type is identical, which leads to application of an RPO-based dormancy standard to a security held in an account directly with the issuer (through the transfer agent) and an inactivity standard to a security held in a brokerage account.
Inactivity-based dormancy standards for securities indisputably lead to a higher volume of securities escheatment than dormancy standards based on RPO. For example, Florida, which as noted changed its dormancy standard from RPO to inactivity in 2024, has already passed new legislation this year (S.B. 1452) that would seek to revert to a standard that incorporates RPO because of the volume of securities escheatment that took place after the 2024 legislation took effect.
Although unclaimed property laws ostensibly function as consumer protection laws, there is no valid consumer protection concern addressed through the escheatment of securities. Investors who hold securities in inactive accounts are generally not charged inactivity or other service fees, and many investors intentionally do not interact or engage with their investments. Indeed, because states liquidate shares after they are reported and remitted, escheatment can harm consumers. Shareholders who claim their property post-escheatment are often dismayed to learn that the state sold the shares and can only return the proceeds of the sale to the shareholder, excluding any subsequent market value gain. See, e.g., Vial v. Mayrack, No. 1:24-cv-01313 (D. Del. Dec. 4, 2024).
Compounding this problem, some state laws give the state rather than the shareholder all dividends or other post-escheatment gains in value, even those that occur before liquidation. See, e.g., N.C. Gen. Stat. section 116B-64. As we discussed in a previous advisory, those laws have prompted numerous shareholder lawsuits against state unclaimed property agencies, including Peters v. Cohen, No. 24-1040 (9th Cir. Mar. 7, 2025). To date, however, shareholders have not been able to achieve meaningful judicial relief from these litigation efforts, including in the form of the return of escheated shares.
SAFER Act Overview
The SAFER Act seeks to ameliorate the harm caused by premature escheatment and liquidation of securities by regulating the remittance of securities by holders (that is, financial institutions). It does not dictate the dormancy standards that states can adopt or otherwise seek to enact a national escheatment regime for securities.
In particular, the SAFER Act provides that a financial institution that has custody of a covered asset—which is defined to include a security, digital asset, or investment account—must not “yield custody” of the asset, any proceeds from the sale of the covered asset, or any payment related to the covered asset under any state unclaimed property law or regulation unless certain conditions are met. These conditions vary depending on whether the owner of the covered asset is a natural person or not:
- If the owner is a natural person, the financial institution must wait three years after the owner’s death has been confirmed before yielding custody of the assets, provided that no fiduciary appointed to represent the owner’s estate has contacted the custodian within that three-year period, and provided that there is not another owner of the assets that is a living natural person.
- If the owner is not a natural person, the financial institution must wait until there has been a five-year inactivity period before yielding custody.
A financial institution must also determine whether the owner is deceased by comparing its records with government death databases such as the Social Security Death Master File or similar state databases if there has been no contact or activity by the owner for five years beginning on the date when a natural owner reaches retirement age as defined by the Internal Revenue Code (IRC). This must be done every five years.
Significantly, the SAFER Act “preempts any State law, regulation, ordinance, or other provision that requires a financial institution to remit, escheat, yield custody, or otherwise transfer any asset, security, or investment account to a State or local government in any manner that conflicts with this section.” In other words, if a state were to assert that a security was presumed abandoned based only on inactivity, but the owner was not confirmed to be deceased, the SAFER Act would preclude the state from requiring the holder to transfer custody of the security to the state. Although federal preemption is applicable to state escheatment laws in other contexts (including, for example, in ERISA), this would be the first express preemption provision that pertains specifically to unclaimed property laws.
What’s Next
For now, the SAFER Act is pending in the U.S. House Financial Services Committee. It is unclear whether Congress will be able to pass the legislation despite bipartisan support. That said, H.R. 8338 nonetheless represents a significant milestone in the ongoing policy debate regarding the proper treatment of securities for unclaimed property purposes. The introduction of the bill also coincided with a letter U.S. Senator Elizabeth Warren, D-MA, sent to the National Association of Unclaimed Property Administrators seeking detailed information on states’ practices regarding escheatment of securities and adoption of inactivity dormancy standards, which was also met with praise across the industry—including by the Securities Transfer Association. These issues now clearly have the attention of several prominent lawmakers, which bodes well for possible future federal legislation.
In the meantime, holders should continue tracking and monitoring state legislative and regulatory activity. States routinely update and change their dormancy standards and practices for securities property, often in ways that are detrimental to shareholders.
AlstonUP
Stay informed on states’ evolving unclaimed property and escheat laws with AlstonUP. Our Unclaimed Property Team tracks proposed legislation on a national basis, actively monitoring every relevant bill and regulation from introduction to enactment to gauge their impact on unclaimed property holders. Visit AlstonUP to learn more and access our tools.
If you have any questions, or would like additional information, please contact one of the attorneys on our Unclaimed Property team.
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