Robert A. Marsico
Partner
201-896-7165 rmarsico@sh-law.comFirm Insights
Finders Keepers: Could Your Financial Account Escheat to the State?
Author: Robert A. Marsico
Date: August 11, 2014
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If you don’t regularly monitor your finances, you could lose out. Allowing accounts to lay fallow for too long may result in your assets escheating to the state.
The term “escheat” refers to the title transfer of financial assets (such as savings account deposits, uncashed checks, and securities in retirement accounts) to a state authority because the rightful owner failed to make claim, engage in a transaction or provide instruction for a specific time period. In New Jersey, the escheatment period is generally three years. Many types of inaction can result in funds being considered “abandoned,” such as failing to cash a check, update your address, or complete a transaction within a specified period of time.
Once your financial institution deems the account abandoned, it must make a diligent effort to contact you. However, if you do not respond, perhaps because your address has changed or you mistake the correspondence for junk mail, the firm will begin the process of transferring your property to the state.
Each state has its own escheat laws regarding abandoned property, but the process is revocable in most cases. To get your money back, most states will require you to complete a claim form and provide proof of identity. If your assets were liquidated, you will likely only receive the proceeds of the sale, which may not reflect the current market value.
While the intent of escheatment is to ensure that financial assets are marshaled for safekeeping, the process often creates a windfall for cash-strapped states. As a result, a number of states have modified their escheatment laws to shorten the timeframe required for an account to be considered abandoned and impose strict monitoring and reporting obligations on financial institutions.
To avoid letting your account escheat to the state account holders must be proactive — make sure to update your address, cash all checks from financial institutions, and carefully monitor your mail. If a loved one becomes incapacitated or passes away, it is important to take inventory of all their accounts and determine what steps are needed to transfer or liquidate the assets.
If you have any questions about this post or would like to discuss the legal issues involved, please contact me, Bob Marisco, or the Scarinci Hollenbeck attorney with whom you work.
- Practices: Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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