Have you ever wondered where the money in the government's unclaimed property website comes from? Well, one of the sources of this unclaimed property comes from uncashed checks and abandoned accounts that have been escheated to the state. People and their beneficiaries lose out on money simply because they don't know it's there.
Here's how an escheatment works: Sometimes there are uncashed checks that have been lost and never reissued. These simply need to be reissued. The bigger concern may be when the entire account is due to be escheated. Say that you move twice in a year and forget to tell somebody, for example, the post office and your mutual fund company. If that mutual fund company receives several pieces of returned mail, the company will freeze the mail going to that address while it puts in a search to find the missing shareholder. Unfortunately, you never told the post office that you were moving, so they don't have a forwarding address. The mutual fund company is then required to expend resources trying to locate the shareholder. The firm may use the internet with sites like anywho.com, switchboard.com, and whitepages.com to locate the shareholder. Search engines like google rarely provide quality results because there is too much unfiltered information to wade through. As a last resort, the company may use a paid search service such as Intelius to try to find the shareholder.
After an extended period of time, usually several years, the mutual fund company will need to abandon the search. At that time, the account or uncashed checks, will be turned over to the state treasurer's office. The process to get your unclaimed property can be lengthy and complex at that point.
So how can you avoid your account and uncashed checks from going to the lovely state government? It's pretty easy. Make sure that people have a way to contact you. Update your post office when you move and keep the financial institutions in the loop. If you have a will, it's a good idea to let the beneficiaries and heirs know that the account exists. Let them know that in the event of your passing, that they will need to contact the companies to update their records.
Escheatment can be an important topic to know about and I hope that this brief post has been useful. Feel free to drop me a comment if you have any questions and I will try to answer to the best of my ability.
Financial Term, Escheatment, Unclaimed Property, Post Office