What is escheatment?
When a firm is unable to locate an account owner, and that account has remained inactive for a state specified amount of time (often three to five years), the state will claim the account through “escheatment.” Once claimed, the state becomes the owner of the account. Afterwards, states will often sell the securities and treat the proceeds as state funds. If the state receives a valid request from the previous owner, it normally provides the value of the account in cash (at time of escheatment).
To make the process explanation simple, we made a flowchart if you use any of Rapid Financial’s services.
- Annual review for unclaimed property. Review files annually to identify all reportable unclaimed property.
- Perform holder due diligence per state requirements. Identify options for notifying owners about their property before the property becomes reportable to the state.
- Send notices to property owners as applicable. Notices of property available and intent to remit to the state are delivered, as applicable, to owners.
- Afterwards, handle owner claims resulting from notices. Respond to all owner claims received and process funds to owners, as per owner request.
- Finally, submit holder reports and remittances. Property not claimed by the owner will be remitted along with the holder reports to states according to state timeline requirements.
States are increasing unclaimed property enforcement. You could face costly consequences should you be audited and found to have failed to turn over all unclaimed properties. Rapid Financial will take responsibility for unclaimed funds and escheatment should that be a possibility. In addition, we take on the risk of check fraud for you. When you cut out checks by making the switch, you eliminate unclaimed and uncashed checks as well as the risk of escheatment!