Cash-strapped states quicker to seize unused accounts
— -- Faced with swelling budget deficits, a growing number of states are taking control of unclaimed property — such as bank accounts and traveler's checks — sooner.
Generally, states can seize abandoned property if the owners fail to claim it after a specified period that varies by state.
States collected $5.2 billion in unclaimed property in 2006, up 33% from 2003, after adjusting for inflation, figures from Delaware, Pennsylvania and the National Association of Unclaimed Property Administrators show.
People should track their bank accounts and other assets, says Arkadi Kuhlmann, CEO of ING Direct, an online bank. ING, which turned over $3.8 million to states last year, is warning customers that states can seize accounts if there's no activity for a certain period, often three to five years.
State administrators acknowledge that some states have stepped up their timetable for seizing unclaimed property.
"I'm not going to deny that (some) states have looked at this as a revenue-generating activity," says Michael Fitzgerald, past head of the National Association of Unclaimed Property Administrators. "But there's a vast majority of states that want to return the money to rightful owners."
What states are doing:
• At least three states — Washington, Alabama and Oregon — have loosened laws to let them claim most abandoned property after three years, instead of five. In Washington, that "helped with what at the time was a budget problem," says Mike Gowrylow at the Department of Revenue.
• Delaware, South Carolina and Louisiana have cut their dormancy periods from five to three years for stocks and dividends. Delaware says unclaimed property has become its third-largest revenue source. South Carolina Assistant State Treasurer Barbara Rice says the shorter dormancy period helps people, because the sooner the state can get control of unclaimed property, the sooner it can alert the owners.
• This year, Kentucky changed its law so that abandoned travelers' checks can be claimed after seven years, instead of 15. American Express has sued, saying the law "exceeds the Legislature's revenue and taxation power."
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