Are Overseas Military Members Being Shafted by US Unclaimed Property Departments?

Military

The AssetMine team has reviewed and analyzed 148 million unclaimed financial asset records valued at over $55 Billion and noted an unexpectedly large prevalence of unclaimed properties addressed to Overseas Military Mail Addresses.

AssetMine’s analysis identified approximately 75,000 lost and escheated assets addressed to US Overseas Military Personnel. The overwhelming majority of these assets are being held in New York, Virginia, California and Delaware.  Since many states refuse to publish the values of the escheated assets that they hold belonging to all owners it is difficult to value the exact amount of funds owed to military personnel but industry experts estimate it could be as high as $50 million.

The disturbing irony here is that US state governments are taking in money that belongs to military personnel who are often selflessly serving and defending their country overseas, and then making it difficult for them to locate and recover their assets. Unclaimed property holders and state governments should be honoring these patriotic men and women by making every effort to unite them (or their families) with these hard-earned funds instead of using the assets to fund government budget deficits.

Could New York be Withholding Foreign-Owned Unclaimed Property from their Online Searchable Database?

foreign-money-hidden

US State governments have escheated tens of millions of assets worth tens of billions of dollars belonging to both domestic and foreign owners. An analysis of US State escheatment databases indicates that billions of dollars’ worth of dormant assets belonging to foreign owners in over 230 countries around the world have been transferred to US State treasuries over the past couple of decades. Foreign owners are at a great disadvantage in locating and recovering their lost assets in some US states and deserve the same consumer protection as is granted to domestic owners in the US and as US asset owners would expect to be granted when recovering their own assets internationally.

Of course, unclaimed funds can only be recovered for those assets that are publicly disclosed by state unclaimed property programs. When UP officials mysteriously fail to disclose assets for any reason, consumer protection rights are compromised, and state governments are unfairly benefiting.

For instance, from extensive analysis of publicly-available unclaimed property data provided by the Office of the New York State Comptroller, it appears foreign assets are vastly under-reported in their online searchable database. This is unacceptable as foreign owners of assets being held in New York (of which there are likely tens of thousands) will never be able to locate or recover their money.

This analysis shows that only about 3,000 international assets have “slipped through” into New York’s data pool of over 10 million records posted since 1985. This extremely low rate of international record prevalence is statistically too low to be a correct representation of the number of foreign-owned assets held in a jurisdiction such as New York, where international transactions are commonplace and numerous. This stands out even further when compared with other states, which do not have the level of international financial and business activity that exists in New York.

Life Insurance Companies Avoiding Payment on Unclaimed Policies

LifeInsurance

Buying a life insurance policy should bring peace of mind, knowing that in the event of a death, family members will be able to cope financially. The disheartening truth is that many of these assets are never paid out to grieving families.

In reality, people are often financially unorganized when they die, with assets scattered about and if they have a Will, it is often out of date. Especially in old age, people can forget about a life insurance policy they took out years before, can misplace important documentation, or fail entirely to inform next of kin about the policy.

In Canada and some US states, insurance companies are actually NOT required by law to seek next of kin when a policy beneficiary does not come forward after a death. They are only required to take action when prompted by next of kin.

Many US states impose unclaimed property legislation which aims to protect consumers and reconnect families with their unclaimed life insurance policies. Such laws require an insurer to compare its policies and retained asset accounts against a death master file on a regular basis to identify possible matches.

In Canada, no such laws exist, allowing insurance companies to keep $ Millions in unclaimed life insurance policies, for which they have been receiving premium payments for years and years.

Can Outsourcing Unclaimed Property Recovery Benefit Your Company?

Outsource

Many companies holding dormant assets are concerned primarily with compliance when it comes to Unclaimed Property, while in all likelihood there could be a windfall of assets out there waiting for them. With time and resources low, why not reach out to an Unclaimed Property Recovery firm who will search high and low for your assets on a contingency fee basis?

Such a strategy has its benefits:  for one, there is nothing to lose. Firms such as Assetmine Global are paid only on success. That means there is no cost until funds are recovered, and even then, fees are reasonable and proportional in value to the size of the claim.

That’s not all.  What about allocation of resources? Taking valuable employee time away from usual activities to work on Unclaimed Property claims could not only be bad for business but also can result in claims taking far longer than they should as higher-priority tasks take precedence. Hiring professionals who specialize in tedious jobs such as searching, claiming and endless correspondence is usually a more cost-effective approach overall.

And finally, leveraging the expertise of professionals who are well versed and well connected in the world of unclaimed property can pay off big time. Unclaimed Property Recovery firms such as AssetMine Global actively compile and analyze millions of unclaimed property records from all over the world. They have developed proprietary technologies that can efficiently and comprehensively locate any asset that is out there for your company, and have the resources and knowledge expertise to navigate the claims process in a reasonable time frame.

Revised Uniform Unclaimed Property Act (RUUPA)

RUUPA

The unclaimed property laws of most US states are actually based on one or more versions of the Uniform Unclaimed Property Act championed by the Uniform Law Commission. Versions of the 1954 act have been revised in 1966, 1981, 1995 and most recently in 2016. The recently Revised Uniform Unclaimed Property Act (RUUPA) is the result of 4 years of collaborative efforts by ULC Committee Members and Industry professionals to establish improved legislations.

Over the next few years, it is expected that US states will review the recommendations contained in the 2016 revisions, and possibly adopt them into their legislation. To an extent, revisions may also affect how states’ existing laws are interpreted.

Read a summary of the 2016 revisions here.

Unclaimed Property in New Zealand

new-zealand

Unclaimed Property in New Zealand is governed by the Unclaimed Money Act 1971. Unclaimed Money is transferred to the Crown Treasury or the Inland Revenue Department, or the Public Trust depending on the type of asset.

The Inland Revenue Department (IRD) publishes an Unclaimed Money list of the unclaimed money that it holds on their website. The Crown Treasury publishes a statement of the monies held in the trust account in the New Zealand Gazette at the end of each financial year. The Public Trust can be contacted with enquiries if believed to be holding one’s assets.

Unclaimed Property in Australia

australiaaustralia1

Australia has moderately robust Unclaimed Property statutes in place consisting of 9 unclaimed property laws: One federal, six state, and two territories.

Unclaimed property is federally governed under the Banking Act (1959) and most recently amended as per the “Banking Amendment (Unclaimed Money) Act 2013”. Changes include:

• Dormancy periods shortened for most property types from 7 years to 3 years
• Interest now paid on claims retroactive to July 1, 2013

The Australian Securities & Investment Commission (ASIC) is the primary federal custodian of dormant bank accounts, credit union and building society accounts, insurance policies, company shares, lottery prizes, and company deregistration proceeds. Some other asset types are governed by Provinces and Territories each with their own Unclaimed Property division:

• NSW – New South Wales
• QLD – Queensland
• SA – South Australia
• TAS – Tasmania
• VIC – Victoria
• ACT – Australian Capital Territory
• NT – Northern Territory

Japan’s New Unclaimed Property Law Benefits Charity

japan

Japan’s parliament approved a law as of November 2016 which allows dormant funds to be managed by a newly formed nonprofit group with a mission of supporting groups that address social problems. The funds will be held and utilized by this group under government monitoring until rightful owners of the assets come forward.

More than 80 billion yen ($700 million) in bank accounts becomes dormant each year in Japan. Up until now, bank accounts left dormant for ten years were being accepted by the banks as profit if the owner could not be found.

The new law could revitalize Japan’s relatively small nonprofit sector which has trouble raising funds in part because tax laws make it harder than in the U.S. to get deductions for charitable contributions. Using dormant funds to support nonprofits could be a chance for Japan’s donation culture to grow significantly!

Unclaimed Property in Canada

canadaflag

Unclaimed Property in Canada – Canada is woefully behind all other major developed countries when it comes to consumer protective unclaimed property legislation. Some of the US states and other countries around the world have had such legislation in place for 50+ years.

Only 2 provinces in Canada (Alberta and Quebec) have comprehensive unclaimed property legislation in place and provide searchable databases. BC has a voluntary, less comprehensive system in place.

Under Canadian federal law, chartered banks are required to remit unclaimed Canadian dollar bank accounts and financial instruments to the Bank of Canada after a 10 year dormancy period. This is good for Canadians and brings forth about $1 billion in unclaimed property at any given time. However, Canadian banks do significantly benefit from not remitting all other types of dormant assets such as accounts or instruments denominated in foreign currencies, insurance and brokerage assets.

Experts estimate that there is an additional $1 billion or as high as $5 billion in dormant financial assets in Canada that are not being made publicly available for the benefit of the asset owners or their heirs, or being transferred to government for custody on behalf of owners. Unfortunately for consumers these assets remain with the holding corporations such as insurance companies, brokerage firms, banks, retailers, and even some government agencies. These billions of dollars in assets belonging to Canadian consumers and small businesses will never be collected by rightful owners until comprehensive unclaimed property law is introduced in the remaining provinces.

Ontario is by far the largest economy in Canada, and with many corporations and most corporate head offices located in the Greater Toronto area, this is the location of the majority of unclaimed property in Canada. Unclaimed property legislation for Ontario was drafted in 1989 but never enacted into law. Recent attempts to introduce a more modern Unclaimed Property law for Ontario has unfortunately stalled and has been mysteriously “pending” for years, due to the suspected aggressive lobbying of the Ontario government, by those same companies and industry associations who benefit most from holding the dormant assets.

When will Ontario and the remaining Canadian provinces enact this consumer protective legislation to protect hardworking Canadians from losing their money forever?

Unclaimed Property Priority Rules in the US

usarrows

When property is abandoned in the US and the rightful owner is nowhere to be found, the funds are remitted to the government and held there until a claimant comes forward. The concept is simple enough, however, there are often scenarios where it is unclear which government should get the funds! Is it the state where the transaction took place, the state where the owner is believed to be located, the state where the holder is incorporated, or the state where the holder’s primary business location resides?

The U.S. Supreme Court established two unclaimed property priority rules with its Texas v. New Jersey decision in 1965:

  • First Priority Rule:  Abandoned property must be escheated to the state of the owner’s last known address, as determined by the holder’s books and records.
  • Second Priority Rule:  The property is paid to the state of corporate domicile if the owner’s address is incomplete or unknown, or if the owner’s last known address is in a state that does not provide for escheat of the property owed.

The definition of “corporate domicile” has been a source of confusion for how to handle unincorporated holders. The state of “corporate domicile” can be interpreted as the state of organization or formation of the entity, on the other hand it could be its principal place of business.

This confusion can often make it difficult for owners to determine where their assets are, and in some cases they may end up somewhere other than they expect!

To make things slightly more complicated, there are exceptions to these rules for some asset types:

  • Following a 1972 decision in Pennsylvania v. New York prompting the Disposition of Abandoned Money Orders and Traveler’s Checks Act of 1974 (Act), money orders, traveler’s checks and similar written payment instruments other than third-party bank checks are escheated to the state where the money order or traveler’s check was purchased. If that information is not available, it escheats to the state where the holder’s primary place of business is located.
  • In the 1993 case of Delaware v. New York concerning unclaimed securities distributions held by intermediary banks, brokers and depositories, it was determined that the intermediary—not the issuer—is considered the holder. Thus, under the second priority rule, the intermediary’s state of corporate domicile receives the unclaimed property.