Unclaimed Property: How to Track Down Lost Assets
If you have switched jobs in the past, you have likely left a retirement plan or two behind and have a new plan with your new employer. If you do this multiple times throughout your life and have not consolidated accounts, you may find that it’s hard to keep track of these different accounts. When a financial institution can no longer reach you for an extended period of time, that account may be turned into the state as unclaimed property in a process known as escheatment. According to the Minnesota Department of Commerce’s Unclaimed Property Division, more than $750,000,000 in unclaimed property has been returned to their owners in Minnesota alone.
Unclaimed property is more than just retirement plans and investment accounts. It can also be bank accounts, tax refund, insurance claim settlements and apartment security deposits. Each state’s unclaimed property program is different, but in general, property left unclaimed for an average of five years is required to be turned over to the state by financial institutions for safe keeping.
It’s important to note that as part of this process, if the unclaimed asset is stock, for example, the state may end up selling the stock and keeping the unclaimed asset in cash. In a recent case, this meant that stock that was turned over to the state as unclaimed property in the late ‘90s was then sold to cash in the early 2000s. Consequently, the investment income the stock would otherwise have generated was no longer collected and credited to the total of the unclaimed property. Furthermore, the individual did not benefit from any of the stock splits that occurred during this time period. As a result, leaving property unclaimed for an extended period of time could significantly impact its value.
To avoid this happening to your assets, a regular unclaimed property check is important. To conduct this search, you can visit https://unclaimed.org. From there you can select a state and will be directed to the individual state’s site. If you do find property in your name, you can follow the steps the state’s site lays out to file a claim.
A great way to prevent your assets from being classified as unclaimed is to create and regularly update a financial plan. This is an easy way to have a snapshot of all of your different assets and a map of where they are custodied. This not only helps keep your finances organized for you but also is something that a spouse or loved one can access should something happen to you, and they need assistance locating your assets. In addition, when you leave an employer, consider consolidating your accounts to one custodian when possible and take advantage of rollover options.
Losing track of your assets and winding up with unclaimed property can be avoided. At Heritage Wealth Architects, we can help you to create a financial plan to help organize your financial life. In addition, we can help facilitate family wealth discussions and assist with consolidating and transferring accounts to one custodian when appropriate. Please contact a member of our team with any questions.
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