Unclaimed property and assets – escheated estate funds
Unclaimed property and assets – escheated assets
What are escheated assets?
In the US, all financial institutions are required to report to the relevant State all instances when personal property has been abandoned or unclaimed after a period of time specified by State law. This is usually due to a long period of inactivity.
When an asset is declared as abandoned or unclaimed, the State then claims the account through the escheatment process, with the State becoming the owner of the asset.
Stocks and shares (also known as securities) are usually sold by the State and the funds are then treated as state funds. However, if a person makes a valid claim for the abandoned property, the State will normally provide the claimant with cash equal to the value of the asset at the time of the escheatment or, if an investment is still held, arrange for a transfer of ownership.
Why does the State often sell escheated stocks and shares?
Usually this is done to protect the owner of the shares and to preserve the value of the shares at the point of escheatment. While the value of the shares may of course increase over time, there is also a real risk that the value may decrease, or something may happen in the future to the company, which may make the shares less valuable.
Why do escheated assets come up so often in estates?
In the case of shares in the name of a deceased owner, accounts are often declared as inactive because dividend cheques are no longer being cashed, or the account into which the dividends were being paid has been frozen or closed.
Escheatment of US shares is becoming increasingly common, particularly in matters where the estate has had to go through the long process of obtaining federal tax clearance before they can attend to the administration of the assets. Many transfer agents will still proceed with escheatment, even if they have been notified of the death, as some are unwilling to update their records until the death registration has been formally completed.
I’ve been contacted by an international company claiming they can assist me – should I just use their services?
While there are many reputable “heir hunters” and genealogist companies, we have found that many international companies of this nature are not regulated and some may charge exorbitant fees. Many work on a percentage basis. For lower value claims, the fees may seem quite reasonable, but once the amount to be claimed exceeds a certain point, suddenly a 15% fee, or even higher, seems very disproportionate to the work involved!
A further issue is that you often do not have any idea as to how much is held, so when signing their standard contract agreement form, you do not actually know how much they may be deducting in fees from the funds you are due. Many also get around ‘losing out’ on the lower value claims by having a “minimum” fee agreement whereby you pay them, for example, at least US$500 or 15% of the claim value – whichever is the highest.
How can Lester Aldridge assist with unclaimed funds and escheated shares?
Our International Private Client team is experienced in submitting claims to US State Departments in order to claim escheated assets and we would be delighted to assist you. We also have experience in searching for unclaimed property when the estate is not sure if assets have been escheated or not.
We always aim to provide our clients with a fixed fee at the outset. Sometimes this is not possible, for example, if the extent of the estate is not yet known, or the requirements need to be confirmed first. In that instance we will usually provide you with a fixed investigation fee with the full fee and requirements then being agreed with you once the initial investigation is complete.
Please contact us at +44 (0)1202 786194 or 786118 for an initial discussion about your matter, or email us by clicking below: