ESCHEATMENT EXPLAINED
by Tracy Olsen | MarketSphere
All businesses are required by law to report unclaimed property on an annual basis. Each state imposes its own unique unclaimed property laws and regulations with changes occurring almost daily. Examples of unclaimed property include tangible property (safe deposit box contents) and intangible property (securities property and general ledger property). Property is subject to the unclaimed property laws after a specific period of time (the dormancy period) where there has been no contact with the owner. Shareholder accounts/securities are presumed abandoned upon the occurrence of one or more events, known as dormancy triggers. Dormancy periods and trigger rules vary from state to state.
Businesses should be conducting regular reviews of their unclaimed property processes to ensure compliance with all state unclaimed property laws. It is crucial to have a robust unclaimed property compliance program, one that includes documented policies and procedures and relates to key areas such as due diligence, reporting and record retention.
A holder’s obligations during a typical unclaimed property reporting cycle can be summarized as follows:
▪️ Identify dormant property; collect data and review records;
▪️ Analyze and apply applicable state laws;
▪️ Perform state-mandated due diligence;
▪️ Report and remit unclaimed property to the states; and
▪️ Retain supporting documentation.
The risks of ignoring or underreporting unclaimed property can be costly and can also cause reputational harm to the company. Noncompliance with the unclaimed property laws may result in fines, penalties, interest and possibly lengthy unclaimed property audits, which can place a financial burden on your business. The first line of defense when audited is having policies and procedures in place. Even if you don’t think you currently have any unclaimed property to report, having a solution to track and report unclaimed property can ensure that your company remains in compliance with all relevant requirements.
ClearTrust has partnered with MarketSphere Unclaimed Property Specialists to ensure clients have access to an experienced unclaimed property service provider.