When we see advertisements or receive emails and texts about being able to get “free” money with no strings attached, we typically see it as spam, too good to be true, or a way for our data to be collected. Sometimes, we even get letters in the mail saying we are entitled to cash in other states, but if it is from a state’s treasury or comptroller department, you may want to open it up to learn more about this “unclaimed property.”
In the past few years, both of my stepbrothers started receiving letters from people saying they could help them with their unclaimed property in New York and, in turn, would require a percentage of whatever is recovered as payment. They thought it was spam at first, but after looking at New York’s unclaimed property site, it turns out they both had some NVIDIA stock that passed to the state.
What they found out was their grandfather bought a few tech stocks for them in the 1990s in custodial accounts. Some of them went to zero, but when I helped them with the claiming process, they ended up with an unexpected sum of money, as you can imagine, given the stock’s growth in the last two decades. They also cut out any middleman fees by doing it themselves. I would say this is a rare case, but I have recently helped clients recover $10 to $100+ on these state websites that they may have otherwise not known about.
What Is Unclaimed Property?
According to the National Association of Unclaimed Property Administrators (NAUPA), unclaimed or abandoned property refers to “…property or accounts within financial institutions or companies in which there has been no activity generated (or contact with the owner) regarding the property.” On their website, they estimate about 1 in 7 Americans have unclaimed funds waiting to be collected. In North Carolina alone, there is about ~$1.3 billion in its unclaimed property fund.
Why Does This Money or Stock Pass Into the State’s Custody?
After a designated period of time (called the dormancy period) with no activity or contact, the property becomes “unclaimed” and, by law, must be turned over to the state. This is also known as escheatment. This period of time mentioned is usually about one year or longer. Common examples are old bank accounts, security deposits, custodial stock or mutual fund accounts, insurance premium refunds or overpayments, tax refunds, safe deposit box contents, etc.
Where Do I Go to Check if I Am Eligible or to File a Claim?
Each state’s treasury or comptroller website has its own section for unclaimed cash and property. You should be able to search there for yourself, your spouse, or even your children by name to see any money waiting to be claimed. They all use a similar search engine, but sometimes the claim may be tied to an old address or a maiden name, so make sure to double-check that in the results.
Once you find any funds meant for you, you can then e-file the claim through the website, and a check(s) will be mailed within 2-4 weeks. I would recommend looking at all the states you have previously lived in. If you are in the process of settling a loved one’s estate, you may want to check these websites as well, but the state may require additional documentation such as a death certificate and letters testamentary when filing.
Here are a few of those state website links:
- North Carolina: North Carolina Unclaimed Property – Official State Website (nccash.com)
- Georgia: Georgia Unclaimed Property | Department of Revenue
- New York: New York State Comptroller
- New Jersey: New Jersey Unclaimed Property – Official State Website (nj.gov)
- South Carolina: South Carolina Official Unclaimed Property Site (findyourunclaimedproperty.com)
- Tennessee: TN Unclaimed Property
- Virginia: VA Unclaimed Property (vamoneysearch.gov)
Does Any Income From These Claims Affect My Tax Return?
As the old rule goes, the IRS recommends you report all income on your tax return. If you filed a claim to recoup money from a past utility company, security deposit, mortgage, closed bank account, or insurance company those typically are not taxable since it is usually viewed as a refund of a premium, past payment, or a rebate.
However, in the case of my stepbrothers, when a stock is involved or liquidated there will typically be a 1099-B or similar tax form sent to you from that state’s treasury department to report on your return. That state may not have the cost basis of the asset listed from when it passed into their custody so you may have to do some digging on which custodian (i.e. Computershare, Vanguard, etc.) the stock was held at initially or talk to your relatives who purchased it (if able) to see if they have old statements to validate. Having the basic info can help offset some of the taxes due or even provide a capital loss if the stock went belly up or is trading at less than it was bought for.
If you have questions about managing your cash or more general questions about financial planning and wealth management, please feel free to contact us.
