Unclaimed Property and States
States have been searching for ways to increase state taxes. One way is through enforcing unclaimed property rules. While the States can’t use the unclaimed property funds to fill in the state budget gaps, they can use the interest earned on the property. Investments and safe deposits that have been turned over as unclaimed property are many times sold for cash. While that may be a good thing for states not to hold physical property when it comes to investments, it is not good for the investor when the investment appreciates.
For example, if you purchased Intel stock back when it was cheap and left it sitting idle in the brokerage account without touching or assessing the stock, eventually the investment is going to become unclaimed property and turned over to the state. When the investment is turned over to the state, the investment can be sold and the proceeds but under the guardianship of the State. In our example when the Intel stock is sold, the value of the stock is $200,000 with a $10,000 initial investment. When you come by the brokerage when day after several years, the Intel investment that you have been tracking is worth $3.9Million. However, the investment is no longer worth $3.9 Million because the state sold it $200,000. They offer you $100,000 after you find out that the investment has been turned over to the state when you go to claim the funds. How would you feel?
This actually happened to an individual in California who sued the State in Taylor v Westley and won. States are still aggressively searching for your unclaimed property. So go ahead and search for your name in the unclaimed property. You never know what you will find and it’s better than looking under a rock.
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