The Escheatment Process
All states require financial institutions, including brokerage firms, to report
when personal property has been abandoned or unclaimed after a period of time specified
by state law — often five years. Before a brokerage account can be considered abandoned
or unclaimed, the firm must make a diligent effort to try to locate the account
owner. If the firm is unable to do so, and the account has remained inactive for
the period of time specified by state law, the firm must report the account to the
state where the account is held. The state then claims the account through a process
called "escheatment," whereby the state becomes the owner of the account.
As part of the escheatment process, the state will hold the account as a bookkeeping
entry, against which the former account owner may make a claim. States tend to sell
the securities in escheated accounts and treat the proceeds as state funds. When
a former account owner makes a valid request, however, the states will normally
provide the former owner with cash equaling the value of the account at the time
of escheatment. This amount of cash does not include any dividends or interest covering
the time after escheatment.
There are several websites, including commercial ones, where you can search for
unclaimed property. One non-commercial site, the National Association of Unclaimed
Property Administrators, allows you to search by individual state.
States have their own requirements for finding and claiming unclaimed property.
If you believe you have unclaimed property, the state will require you to send them
information about yourself to verify your ownership of the unclaimed property. After
verifying your ownership, the state will either mail you a claim form or permit
you to fill out the form online and print it for submission to the state.
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