Unclaimed Property is assets that are abandoned and do not have an active rightful owner. Mostly, unclaimed properties are handled by the federal or local state government.
Different reasons can be counted as a property becoming unclaimed. The dormancy period and escheatment are the two common processes that a property should undergo to be considered unclaimed.
As the property is categorized as abandoned, the government handles it. The rightful owner of a property can reclaim his/her property but it needs to undergo a systematic process.
The process of reclamation varies directly depending on the state where you’re reclaiming your property. The U.S. government returns billions of dollars every year to its rightful owner.
It means that there are billions worth of unclaimed properties all over the nation. Usually, properties become unclaimed when there’s no communication between the owner and financial institutions.
It also happens when a person dies without any will or inheritance. Unclaimed properties will always be a liability, especially for their rightful owner.
There can be various reasons why a property becomes unclaimed. But then, the root of these reasons is that the rightful owner was not able to claim his/her property after a long period of time.
After the dormancy period of a property, it will undergo the process of escheatment. The property will be under the government until the rightful owner will reclaim the said property.
What Is The Dormancy Period?
The dormancy period is the time between when a financial institution reports an unclaimed property and when the government authorizes the property to be unclaimed. When the dormancy period ends, the property will be recognized as unclaimed, abandoned, or dormant.
Most states have a dormancy period of at least 5 years. The dormancy period will always take its place whenever an owner is not showing activeness for his/her property.
What Is Escheatment?
Escheatment is one of the highlighted parts as a property becomes unclaimed. It is the right of the government to turn the proprietorship of a property to them.
The said process will be done after the dormancy period of a property. This is the main reason why most of the unclaimed properties are under the supervision of the government.
However, the main goal of escheatment is for the property to always have its owner as it was being unclaimed. The property will no longer be an escheat when it is reclaimed by its rightful owner.
What Are The Examples Of Unclaimed Property?
Examples of Unclaimed are diverse. One of the most common kinds of unclaimed is money. Different financial institutions such as banks and companies owe money to their customers or employees. There are also unclaimed land property and unclaimed things.
Most common unclaimed properties.
Generally, as long as the property was recognized as unclaimed, it has no tax. Unclaimed properties will never be a tax. After the reclamation process and the property was returned to its rightful owner, it can be taxable.
Some unclaimed assets, such as 401(k) or IRA investments, can be reclaimed tax-free.
What Is Reclamation?
Reclamation is the process in which a rightful owner wants to reclaim his/her property. The process of reclaiming property is not similar to finding lost and found objects.
Reclamation is a systematic process and the owner needs to prove efficiently his/her right to reclaim the said property. The federal government of the United States doesn’t have specific rules or websites on how to find and get unclaimed properties.
On the other hand, the District of Columbia, U.S. Territories, and some local states passed a specific law related to unclaimed properties. The revised Uniform Unclaimed Property Act (RUUPA) regulates the systematic process and regulations for unclaimed in the said states and territories.
The said law is the latest form of the Uniform Unclaimed Property Acts that was signed into law last 1954. RUUPA demands the holders of unclaimed properties turn them over in the State Unclaimed Property after the dormancy period.
The process is required so the administrator will be able to return the property to its rightful owner. As the law acts, it will be easier for the owners to reclaim their unclaimed properties.
The U.S Territories and some local states where the Revised Uniform Unclaimed Property Act (RUUPA) is enacted:
As the process of reclamation depends on your local state, the documents are required for reclaiming properties. You can see below some of the most common documents for the process of reclamation:
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