Unclaimed Property is huge - an expert explains why
The following is an explanation of Unclaimed Property and the importance of what lies beneath the surface, from financial specialist Les Himel
Unclaimed Property – What is it?
Every state has an unclaimed property treasury. In the U.S. in total, there is over $50 billion with the largest portion in New York, traditionally the center of the finance industry.
But what is it, and where does it come from?
The states have laws that address forgotten bank accounts, cash value insurance policies, IRA’s, etc. Imagine any bit of cash that appears unclaimed within any institution. When a family member of mine died in 2010, all of the estate was cleared out and distributed but years later, a reimbursement from a hospital was sent to New York state. Little or big things show up from time to time for too many of us.
Think of this acronym: “AFU” as in Abandoned, Forgotten, Unknown.
Has anyone changed employer and left a 401(k) behind, thinking that “it’s doing okay for now, I’ll get to it some other time” and it becomes forgotten? Absolutely. Has anyone moved from one state to another and left a bank account? Oh yes. Here’s a big one: a family member dies and the phrase “I think we found everything, but we’re really not sure!” That happens quite often. That last example represents the “unknown” portion.
State law…how does that come into this? Most states have a simple approach: institutions must turn over “unclaimed property” (aka cash) after a specific number of years. The number of years depends on the state, and the type of account. I cannot be specific to each state, but the range is typically 3 – 7 years.
What determines “unclaimed”? If an account is undisturbed by the owner, that starts the clock. If the institution sends a letter and that letter is returned labeled “no longer at this address” or similar, the institution has done all necessary. “But wait” you say…” doesn’t a bank have to look for the owner? Won’t an investment firm search?” No, the return of an envelope will qualify for satisfying the institution’s responsibility.
Who am I? My name is Lester Nils Himel; the name of my practice is “82 Financial.” I have been in the finance industry for 47 years, in a variety of areas. I encourage you to look at one of my web sites: “Heir Atlas” and read about unclaimed property. Admittedly the write-up is a rant as I get very passionate about this topic. The site is meant to educate, and the education is both free and important.
https://www.heiratlas.com/
Have you looked into Unclaimed Property? At the bottom of the site’s pages, there is a link to “Unclaimed.org” and on that site, scrolling down, you will find a map of the U.S. Click on the state you are in (and later, every state you have ever lived in) to find the search function. Is this the important part? It might be. Two, three, four figure sums are often found, and sometimes larger.
You might be thinking that eventually the owner or beneficiary of these things will find them.
There is much more to this. This use of the site is to help you get your arms around the fact that not all of finance is commonly known.
What is not commonly known? Are you aware that there are various assets/policies/accounts that have expenses and that those costs can eat up the asset? For example, Universal Life Insurance usually requires premium payments, as do Long-Term care (LTC) policies. If those premiums are not paid, the policies can lapse! What might cause premium payments to cease? Increasing cost is frequently a problem, but “forgotten” by an owner in his later years is quite common.
Lapse means they become dead, or evaporate, or become worthless. Lapsed assets never make it to Unclaimed Property. Fun Fact: The insurance companies do count on the money freed up from lapsed policies; a lapse releases that company from otherwise eventual claims, and the previously paid premiums become free money.
What are we suggesting? List your assets and items of importance. Create a roadmap of where to go for all of the things you’ve worked to put in place. Life insurance, LTC policies, Ming Vase, Medical insurance plan, important documents, baseball card collection…list them, but do not list account numbers (too much information for evildoers). If the day comes when you need help, give someone a head start. And here’s the important part: Update your list annually. Update beneficiaries regularly. Every year, review everything. AND: find someone you can trust with the list and update that relationship/responsibility annually.
If your response is “my attorney has everything”, here’s a question for you: will your attorney stay in practice, and outlive you? And, who knows of your attorney beside you? Do you update him/her?
Check unclaimed property listings every year for every family member (dead or alive) for the rest of your life and update your roadmap every year for the rest of your life. Every single year.
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Ken's Unclaimed Funds Finder
Content written by financial specialist Les Himel posted by Ken Abbott abbottsystems@gmail.com
Disclaimer: This is for general information purposes only. It is not intended as financial advice.
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