What Happens To Unclaimed Property In New York
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Last updated 03/15/2024 by
Benjamin LockeEdited by
Summary:
New York State’s unclaimed property laws and the recent mandate on death validation significantly impact how companies manage unclaimed assets. The legislation requires timely death validation and introduces complexities in compliance and operational processes. Effective management and strategic engagement with these regulations can mitigate compliance risks and enhance the company’s reputation.
New York State has established a comprehensive framework for managing unclaimed property, aimed at safeguarding assets that have been abandoned or forgotten and facilitating their return to the rightful owners. This regulatory environment encompasses a wide array of assets, including inactive bank accounts, unpaid wages, unclaimed insurance benefits, and stocks that have remained unclaimed by their owners for a certain duration. The Office of the State Comptroller in New York is at the forefront of this initiative, responsible for the administration of unclaimed property laws, including the collection, safekeeping, and restitution of lost or unclaimed assets
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What is unclaimed property?
Unclaimed property refers to financial assets or personal property that has become separated from its rightful owners over time. This situation typically arises when an account or asset remains inactive for a certain period, and the institution holding it cannot make contact with the owner. Various types of assets can become unclaimed property, including:
- Bank accounts and safe deposit box contents
- Stocks, mutual funds, bonds, and dividends
- Uncashed checks, such as payroll checks or refund checks
- Insurance policies or insurance policy proceeds
- Utility security deposits
- Unredeemed money orders or gift certificates (in some states)
- Annuities, certificates of deposit, and trust funds
- Estates
Each state has its own laws regarding unclaimed property, including how long an asset must be inactive before it is considered “unclaimed” and the process for attempting to locate the rightful owners. This period, known as the “dormancy period,” typically ranges from one to five years, depending on the type of property and the state law.
What are the Unclaimed Property Laws like in New York?
In New York, the laws governing unclaimed property mandate that entities in possession of such property (known as “holders”) must report and surrender these assets to the state by certain deadlines to comply with state regulations. Here’s a simplified overview of key aspects of New York’s unclaimed property laws:
Reporting deadlines in New York
- General Deadline: For most holders, the annual deadline to report and remit unclaimed property to New York is March 10.
- Insurance Companies:Life insurance and other insurance companies have a different deadline, which is April 30.
- Early Reporting: Holders are encouraged to report early if they have made a diligent effort to locate the property’s rightful owners but were unsuccessful.
Electronic reporting requirements
- If a holder is reporting 10 or more properties, they are required to submit their reports electronically through the state’s designated portal.
- For reports with fewer than 10 properties, paper submissions are permitted.
Due diligence notifications
- New York requires that holders send a notice to the apparent owners of unclaimed property valued at $50 or more.
- These due diligence letters must be sent at least 90 days before the reporting deadline to the owner’s last known address, using first-class mail.
- The notice should clearly inform the owner that their property will be transferred to the state if they do not claim it from the holder before the report is filed.
Dormancy periods
- Wages, Payroll, or Salary: 3 years
- Traveler’s Checks: 3 years
- Checking Accounts: 3 years
- Most Other Property Types: Generally 3 years
The period after which property is considered dormant (unclaimed) varies by property type. During the dormancy period, if the owner does not show interest in the property or there is no contact with the holder, the property is deemed unclaimed. After this period, the holder must report and transfer the property to the state, which then assumes the responsibility of safeguarding it until the rightful owner or heirs claim it.
How to claim your unclaimed property in New York
Reclaiming unclaimed property in New York is an easy process. Here are the steps to find and claim your property.
- Visit the Official New York Unclaimed Property Website: Start your search at Office of the New York State Comptroller Unclaimed Funds, the state’s dedicated site for reuniting New Yorkers with their unclaimed assets.
- Search for Your Property: Use the search tool on the site by entering your name or the name of your business to see if there are any assets under your name.
- Review the Search Results: If your search yields potential property matches, review the details to ensure they belong to you.
- File a Claim: If you’ve identified your property, you can file a claim through the website. You will need to provide identification and any additional documentation required to prove your ownership of the property.
- Track Your Claim: Keep an eye on the status of your claim through the website. The processing time can vary, so patience is necessary.
- Receive Your Property: Once your claim is approved, you’ll be given instructions on how to receive your property or funds.
New York Abandoned Property Regulation (NY 2 NYCRR 126.1) – Mandated Death Validation
The State of New York has recently implemented a new regulation concerning Abandoned Property, significantly impacting how holders manage the assets of deceased individuals. This regulation mandates that holders must validate the death of an asset owner within 90 days upon becoming aware of the death, with the dormancy period for the unclaimed property starting retroactively from the date of death. This legislative change, effective from March 23rd, 2023, introduces a comprehensive approach to handling notifications of death, encompassing various scenarios beyond direct next-of-kin notifications, such as returned mail indicating death, and internal processes identifying deceased customers. The regulation’s broad scope allows for some interpretative flexibility regarding the validation process, yet it underscores the importance of establishing procedures to comply effectively.
What this means for your organization:
- Operational Challenges: The need to develop and implement validation processes becomes paramount, especially as reliance on the Social Security Administration’s Death Master File (DMF), with its limited coverage, may not suffice.
- Compliance and Financial Risks: Accurately tracking dormancy periods for New York reportable property types becomes more complex, increasing the risk of audits and potential penalties for late reporting, particularly if the death was confirmed years after the fact.
Key Considerations:
- Mitigating compliance risks: Conducting regular death audits and utilizing multiple data sources for death validation can help organizations align with New York’s regulations and prepare for potential similar laws in other jurisdictions.
- Enhancing accuracy: Incorporating diverse information sources, such as state vital statistics, can improve the precision of death validations, ensuring compliance with the regulation’s intent and minimizing the risk of penalties and interest for late reporting.
Pro Tip
Eddy Boccara, founder of Corofy.com offers a few concise insights on the topic:
- “Handling and Reclaiming Unclaimed Property: Once unclaimed property is turned over to the state, it’s held in a trust-like capacity. States actively maintain these assets until the rightful owners or their heirs claim them. Claiming this property typically involves filing a claim with the state’s unclaimed property office, providing proof of ownership such as identification documents or proof of previous addresses. This process is often straightforward and designed to be user-friendly.
- Fees, Penalties, and Documentation: Generally, there are no fees or penalties for reclaiming unclaimed property from the state. However, if one uses third-party services to locate or claim property, they might charge a fee. The required documentation can vary but usually includes a form of identification, proof of address, and sometimes documentation related to the property, such as bank statements or pay stubs for unclaimed wages.
- State Publicization and Technological Advances: States are required to publicize unclaimed property, typically through online databases where individuals can search for their name. These databases are increasingly user-friendly and accessible. Recent legislative and technological advancements focus on making these databases more efficient and easier to navigate. For instance, some states are implementing automated matching programs that cross-reference unclaimed property with tax records, proactively identifying and notifying potential owners.
How do companies engage with unclaimed property?
Companies can engage with unclaimed property in several ways, often navigating the complex legal landscape to manage these assets responsibly and in compliance with state laws.
Compliance and reporting
Business obligations
Businesses, known as “holders” of unclaimed property, are required by law to report such property to the appropriate state authority after it has been inactive for a specified dormancy period. This period can vary by property type, typically ranging from one to five years. For example, unclaimed wages may have a one-year dormancy period, while bank accounts and stocks often have a five-year period. After the dormancy period, holders must electronically submit a detailed report on the unclaimed property, including its type, value, and any information on the rightful owner.
Due diligence requirements
Prior to reporting unclaimed property, holders must attempt to locate and notify the rightful owners through due diligence efforts. This process is designed to ensure owners have the chance to reclaim their property before it is handed over to the state for safekeeping. Due diligence usually involves sending a written notice to the owner’s last known address at least 60 days before the property is reported as unclaimed. The notice should clearly inform the owner about the property and the steps to claim it. This notification is essential for properties valued at $100 or more, facilitating the return of property to its owners before state intervention.
Potential advantages
While the primary goal for companies in dealing with unclaimed property is compliance, there are aspects of the process that can be advantageous:
Financial management
Companies can temporarily use unclaimed property before it’s reported and turned over, offering a chance to benefit financially, such as earning interest. This must be done within legal guidelines, allowing for improved cash flow and financial strategy.
Reputation
Returning unclaimed property boosts a company’s reputation, showing commitment to ethical practices and customer service. This enhances trust and loyalty, positively impacting the company’s image and competitive edge.
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