'Tis the season when the state treasurer's office comes forward with its list of owners of unclaimed property. Hundreds of names have been paraded through the papers to 1) notify people who might be shocked to learn that their forgotten bank account has made its quiet way into the state's General Fund, and 2) make a show of the due diligence the office does to return the loot to its rightful owners.
It was a gas to hear that Kevin Youkilis, David Ortiz and a few other celebrities were on the list. Most of the media that reported on the splashy roll call of missing owners went straight for that bait, capping off their articles with reminders that the friendly folks at the treasurer's office were eager to help you retrieve your forgotten bank account (with interest, no less), and that you can reclaim your property after any number of years.
But two things are worth noticing about the abandoned property program (and such programs in other states). One, the dormancy period—the length of time it takes our assets to become fair game for the state—has grown shorter and shorter. In Massachusetts the dormancy period was 14 years when the program began in 1950. In 1975 the legislature shortened it to 10, in 1980 to seven, in 1981 to five. Now it's shrunk to three. So if you forget to put money into a bank account or take money out of it (or pick up the security deposit from your apartment-before-last or the final check from a job you left), you may have to prove who you are to get your money back.
Banks and other holders of unclaimed assets must notify the owners before handing them over to Boston, but moves and other changes can make correspondence go astray. "I think [the dormancy period] is too short," said Rep. Steve Kulik (D-Turners Falls). "There are college students who may go to school for four years, or people in the armed forces. I would think a minimum of five years would make sense."
And as for preventing people's property from being confiscated, not many banks issue conspicuous warnings to new depositors that they had better keep their accounts from being listed as inactive.
We've all heard of the bankbook that was lost for 20 years, after which the owner went to the bank and found the original $5 deposit had grown into a huge nest egg. The state treasurers heard those stories too, and saw a hot potential source of revenue. Now the states hold an estimated $40 or $50 billion in "abandoned" property and less than half of it is reclaimed, according to the National Association of Unclaimed Property Administrators. Spokespeople for the Massachusetts treasurer's office told the Advocate that in the three fiscal years 2007, 2008 and 2009 the program had returned $177 million worth of property, or about 40 percent—less than half—of what it took in.
The stated purpose of abandoned property programs is to provide a service by creating a holding tank and shaking assets (like unclaimed wages or security deposits) loose so the beneficiaries won't have to deal with reluctant former employers or landlords. The other side of the coin is that the programs create what the Journal of Payment Systems Law has called "interest-free loans that states may never be required to pay," a revenue source that does not carry "the political baggage of new or increased taxes."
The Council on Taxation, which rates state abandoned property programs based on fairness to property owners, clarity of definitions of unclaimed property, treatment of interest on interest-bearing assets, and other standards, ranks Massachusetts' program among the eight best in the U.S. In the meantime, make at least a $1 transaction each year on all your accounts. Don't let the state take your assets. There are better ways to get your name in the paper.
