Say “Aloha” to Your Unclaimed Property
Modern day unclaimed property laws are “custodial” in nature, meaning that the state takes possession of, but not legal title to, property that is reported and remitted to the state. As a consequence, it is the rule in most states that although unclaimed money and assets may be remitted to the state’s general fund and used for state spending, the owner never loses the right to reclaim his or her property. This is in contrast the the historical practice of bona vacantia in England and prior Roman civil law, where “ownerless goods” would be owned by the crown.
In fact, it is the custodial nature of these laws and the unlimited opportunity for the owner to reclaim his or her money that serve as the states’ most prominent response to frequent holder complaints that state unclaimed property laws are increasingly unfair, complex or burdensome. Some states, however, are quietly limiting owners’ rights to make claims for property held by the state.
For example, pursuant to Hawaii Senate Bill 2321, effective July 1 of this year, an owner has 10 years to file a claim for property valued at $100 or less. After that time, according to the new law, the property “shall escheat to the state” permanently. According to testimony by the Director of the Department of Budget and Finance (who, to his credit, testified against this legislation) the new law means that there are 275,000 items (in an aggregate value in excess of $20 million) that are now subject to escheating permanently to the state.
Similarly, in Idaho, the amendment to Section 14-518 of the Act means that items valued at less than $100 need not be listed on the state’s website database of unclaimed property held by the state. While this represents a small fraction of unclaimed property held by the states as a whole, as states become more addicted to unclaimed property as a revenue raising measure, such initiatives will probably increase (to the detriment of owners).