Why So Much Money Ends Up as Unclaimed Property and What That Means for You

On February 1, states all over America recognize National Unclaimed Property Day, a day set aside to highlight a surprisingly common financial issue: billions of dollars in forgotten assets that state governments currently hold, waiting for their rightful owners to come forward and claim them.

This observance serves a practical purpose: to assist you in reclaiming money and assets that are rightfully yours and to help prevent future losses before they occur. By understanding what unclaimed property is, how assets can become lost, and what steps you can take to safeguard yourself, you could potentially recover funds that can be put to good use, ensuring that your family never loses track of what you have worked so hard to build.

What Unclaimed Property Really Means

When people hear the phrase “unclaimed property,” they might picture abandoned real estate or forgotten treasures tucked away in old storage units. However, the truth is much more mundane, affecting millions of Americans each year.

Unclaimed property refers to financial assets that have become inactive due to a lack of activity or communication between the owner and the institution holding the funds for a specified period, usually ranging from one to five years, depending on state regulations. If a company is unable to contact the owner after this legally mandated timeframe, it is required to transfer the asset to the state through a process known as escheatment. The state does not permanently own the property but acts as a caretaker until someone comes forward to claim it.

The types of assets that can become unclaimed are surprisingly common and include forgotten bank or credit union accounts, often opened years ago with small balances that seemed insignificant. Uncashed checks or refunds often go unclaimed when someone moves and fails to update their address.

Other examples include stocks, dividends, or mutual funds that were purchased long ago and forgotten, life insurance payouts that beneficiaries were unaware of, contents of abandoned safe-deposit boxes, and even payroll checks from previous employers. When a person changes jobs and relocates without providing a forwarding address, their final paycheck can easily turn into unclaimed property.

How Assets Vanish and Why It Can Happen to Anyone

Individuals often lose track of their assets for surprisingly common reasons that aren’t linked to irresponsibility or negligence. Transitioning to a new job can lead to the potential loss of old retirement accounts amidst the hustle of starting anew. Changes in name due to marriage or divorce can sever ties with accounts that are registered under a former name, particularly if every institution isn’t informed about the change.

After the passing of a loved one, family members frequently remain unaware of all the accounts or policies the deceased possessed. Without a thorough inventory of assets or a method for tracking financial details, crucial accounts can easily be missed. This oversight may result in significant amounts that the deceased intended for their family to inherit, which could have positively impacted their lives.

The magnitude of this issue is astonishing. Across all 50 states, governments collectively hold an estimated $70 billion in unclaimed property. The National Association of Unclaimed Property Administrators reports that states return billions each year to rightful owners, yet the total amount held continues to increase annually. This indicates that despite ongoing efforts to raise awareness, more property becomes unclaimed at a faster rate than it is reunited with its owners.

These figures represent real individuals who worked hard for their earnings, saved diligently, or were entitled to benefits they never received. The issue isn’t resolving itself because modern financial life has become more fragmented. Most individuals engage with multiple banks, investment firms, insurance companies, and employers throughout their lives, creating numerous chances for assets to slip through the cracks. Accounts are often managed online, without physical statements, and unless family members are aware of the accounts and have the necessary passwords to access them, assets may be lost.

The Significance of the February 1st Commemoration

National Unclaimed Property Day was created with three specific objectives. Firstly, it motivates individuals to explore state databases and recover lost assets that are rightfully theirs. Secondly, it informs the public about how easily property can become unclaimed, helping them realize that the issue is not solely about negligence. Lastly, it seeks to avert future losses through improved financial organization and planning.

February 1 was deliberately selected as an early-year date, acting as a “clean-up and reset” opportunity before tax season starts and before another year goes by with assets remaining inactive in state custody. On this day, states, consumer advocates, and financial experts convey a straightforward message: “Check. Claim. Prevent.”

Taking Steps: What You Can Do Immediately

The most urgent step you can take right now is to search (or, “check”) for unclaimed property under your name. Each state has a free, searchable database for unclaimed property. Head to your state treasurer or controller’s website and find the unclaimed property section. The search only takes a few minutes and requires just your name and the state where you have lived.

There isn’t a single database to check for property, so if you’ve relocated throughout your life, make sure to search in every state where you’ve lived or worked. The National Association of Unclaimed Property Administrators has a website at unclaimed.org that provides links to all state databases, making it simple to search multiple states efficiently.

When you search, consider trying different variations of your name, including your maiden name if it applies, any nicknames you might have used in a professional setting, and names both with and without middle initials. Companies might have recorded your property under any of these variations. If you discover property that belongs to you, the process of claiming it is free. States do not impose fees for returning property to its rightful owners, although you may need to present identification and documentation that proves ownership. If you are claiming property for the estate of a loved one, you will also need to provide a death certificate, proof of your identity, and any other identifying documents required by the state.

The process of claiming property can be challenging and time-consuming, and states have the authority to deny claims. Thus, the more crucial task is to prevent future losses. Proper estate planning can assist with this. When you collaborate with us, we will help you compile a thorough list of all your financial accounts, which includes banks, investment firms, retirement accounts, life insurance policies, beneficiary designations, and any other assets you possess. You will need to include account numbers, contact details for each institution, and estimated values. We can even assist you in updating this inventory on an annual basis.

We also suggest that you keep your inventory in a secure yet accessible place, and ensure that at least one trusted individual knows where to locate it and how to access it in case you become incapacitated or after your passing.

Lastly, it’s wise to update your address and contact details with every financial institution whenever you relocate. Think about consolidating accounts where it makes sense, as having fewer accounts reduces the chances of something being overlooked.

The Bigger Picture

National Unclaimed Property Day highlights a quiet yet expensive reality: if no one is aware of what you own, where it is located, or how to access it, your assets can vanish into the depths of bureaucracy. The aim isn’t solely to recover forgotten assets. The true aim is to ensure that nothing you have worked hard for ever becomes “lost” in the first place.

This February 1, dedicate a few moments to look for unclaimed property. Then, take the more crucial step of organizing your financial affairs so that your assets remain with the individuals you wish to benefit from them. Your future self and your loved ones will appreciate it.

How We Assist You in Safeguarding Your Assets and All Your Loved Ones

National Unclaimed Property Day serves as a reminder that even the most careful individuals can misplace assets in our increasingly complicated financial landscape. However, you don’t have to leave this to luck or depend on an annual reminder to safeguard what you’ve diligently built.

We assist you in developing a thorough Life & Legacy Plan that guarantees your assets reach the people you cherish rather than becoming just another statistic for the state. Once your plan is in place, you can relax knowing your wishes will be respected, your loved ones will be taken care of, and your property will be safeguarded. We also have systems established to regularly review and update your plan as your life evolves, relieving you of the burden while ensuring nothing slips through the cracks.

This February 1, go beyond merely searching for unclaimed property. Take the action that genuinely secures your family’s future.

Schedule a complimentary 15-minute consultation to learn more.

This article is a service of Kristen Wong of Seasons Estate Planning, APC, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.