Short on cash during the recession or know someone who is? I recommend looking into the concept of Escheat and money that is yours but not in your possession. What is the concept of escheatment and how does it work practically?
All states require financial institutions to report unclaimed or abandoned money after a period of time specified by state law (typically five years, but not always). Before an account can be considered abandoned or unclaimed, the firm must try to locate the account owner. If unable, state where the property is located then claims the account through a process called “escheatment,” whereby the state becomes the owner of the account.
States often liquidate the property in escheated accounts and treat the proceeds as their own. When a former account owner makes a valid request to recover their money, the states will normally provide the former owner with cash equaling the value of the account at the time of escheatment. It is worth noting that the amount of cash does not include any dividends or interest covering the time after escheatment – the state keeps that money.
Here is how the law directly affected me and why I know escheatment research and recovery is worth the time and effort:
When I was boy growing up in Richmond, Virginia, my parents opened a checking account for me. I deposited any allowance for chores or holiday money I received in that account. I was 12 when I moved to Washington, D.C. and I left a few things behind in Richmond: friends, toy soldiers in the backyard, and as it turns out, I completely forgot about that checking account I opened in the haste to leave town and start a new life elsewhere.
I’m an occasional listener to the Planet Money Podcast, and they had an episode in January about an escheatment gone wrong. Intrigued, I researched whether any states I’d lived in had money in my name and discovered $300 I had saved in Crestar Bank, which was bought by SunTrust (now Truist Financial). I filled out a few pieces of paperwork that verified to Virginia that I was the rightful owner and a few months later, I received a check for the money I had saved long ago.
If you want a quick guide to each state’s Escheat claims process for unclaimed property, go to this link, which allows you to search all 50 states, parts of Canada, the Virgin Islands and Puerto Rico (also, really randomly Kenya). It’s like searching in your couch cushions for coins, but the money recovered can be much more than a few quarters – especially if it’s a safety deposit box that was unknown at the owner’s death.
* This is not investment or securities advice, nor should it be treated as such. Given that it is likely that anyone using escheatment laws to recover unclaimed money is likely to have to provide information like a Social Security Number to verify ownership, do your due diligence to ensure you haven’t become the victim of a scam in the process.