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Protect Your Money

Lost Property Funds—What Investors Should Know

Money flows into a bottomless funnel

Sometimes you can't avoid handing over money to the government, like when pay your federal and state taxes. But other times you can. If you have financial accounts that go dormant and your financial institution can't reach you, your assets might inadvertently end up in your state's lost property fund. State unclaimed property administrators work hard to help consumers avoid that outcome—but you have an important role to play, too.

Depending on its laws, a
state might have full use
of any unclaimed property
until and unless the owner
steps forward to claim it.

The purpose of unclaimed property laws is to protect consumers by ensuring money owed to them can be returned to them or any heirs. But those same laws can cause headaches for consumers who don't stay on top of their accounts.

This can happen if you don't pay attention to correspondence from your broker, investment advisor, mutual fund, bank or 401(k) administrator, or if you don't notify these institutions regarding changes to your address and contact information. If financial institutions can't get in touch with you within a certain time-frame—often called a "dormancy period"— they may be required to turn over the money in your accounts to the state.

Shorter Dormancy Periods

In recent years, some states have shortened their dormancy periods. This is the number of years you have to take a required action (such as cashing a dividend check or responding to a corporate action). A few years ago, five-year and even seven-year dormancy periods were common. Now, the majority of states have adopted a three-year or five-year dormancy period.

The dormancy "clock" may start ticking when either mail from your financial institution is returned as undeliverable or when you fail to contact your financial institution within the dormancy period. State laws generally require banks, brokers and other institutions to turn assets over to your last known state of residence at the end of the dormancy period. In other words, if you move and don't notify your firm, then there's a good chance that in three years your assets could end up in a state's lost property fund. This can happen even if you haven't moved but also haven't responded to correspondence from your financial institution at least once during the dormancy period.

Lost Property Process—What You Should Know

Each state has different unclaimed property laws that require financial institutions and other organizations to remit lost or abandoned property to the appropriate state authority. Unclaimed property includes securities such as stocks, mutual funds and bonds. It also includes wages, traveler's checks, trust distributions, unredeemed money orders or gift certificates (in some states), insurance payments or refunds, life insurance policies, annuities, certificates of deposit, customer overpayments, utility security deposits, mineral royalty payments and the contents of safe deposit boxes.

The list is long, and dormancy periods vary. For instance, the dormancy period for unclaimed wages is often only one year while some states have much longer dormancy periods for some property, such as travelers' checks.

Depending on its laws, a state might have full use of any unclaimed property until and unless the owner steps forward to claim it. In such cases, the state might be able to sell any securities (including mutual funds) and retain the cash value of them. Not all states liquidate securities—and some states might not do so for a period of time. When an owner attempts to claim their property, they are generally entitled to the property's cash value as of the date the state liquidated it—which means the owner will not benefit from any further appreciation, market gains or dividends on the property.

Before transferring assets to the state, a financial institution must make a good faith effort to contact the property holder. This attempt might consist of using any known contact information for the owner, mailing reminders and issuing notices in publications to locate the owners of these assets before transferring the property to the state. For more information, see the SEC's web page on abandoned or unclaimed property. As you'll see in the tips below, savvy investors pay attention to these notices.

Tips to Hold on to Your Property

Every state maintains a list of unclaimed property and makes that information public. Some states publish the names of all residents with lost property on a yearly basis, maintain a website with this information and engage in a variety of other efforts to locate lost property owners. According to the National Association of Unclaimed Property Administrators, in 2015 state unclaimed property agencies returned a total of $3.235 billion to the rightful owners of the $7.763 billion collected.

While states work hard to reunite residents with their property, it's always wise to check whether any of your assets have landed in a state's lost property fund.

While all is not lost if your property is abandoned or unclaimed, it is something best avoided. After all, if your property falls to the state, you might stop earning interest, dividends or other returns on that property. Follow these steps to help prevent your assets from ending up as lost or unclaimed property:

  • Notify your financial institutions of any changes to your contact information, including email and snail mail addresses. Do so even if you primarily view your account information online. Call your firm if you fail to receive account statements or other information you normally receive.
  • Take action if you receive any calls asking that you update your mailing address, email address or other contact information. To guard against identity theft, you might prefer to thank the caller and then contact the institution on your own to verify that it requested the update.
  • Consider consolidating small accounts to reduce management tasks and to limit your chances of forgetting an account.
  • Check in with your financial institutions at least once each year by phone, email or in person.
  • Periodically check the unclaimed property database of the state you currently live in and any states where you once lived. You can conduct a free multi-state search by going to
  • Check the unclaimed property listings for the states of Delaware, Massachusetts and Maryland, where many financial firms are registered. Note: Some dormant accounts may be listed at the firm's address instead of the account holders.
  • Be attentive to mailings from institutions with which you may not be familiar. Financial firms are rebranded, bought, sold or go out of business on a regular basis.
  • Be open to the possibility that you might also be contacted by a firm handling the affairs of relative or acquaintance. You might be the recipient of their bequest without realizing you were included in their will or estate.
  • Contact your financial institution to determine how it interprets the laws in your state. For instance, ask how your institution handles automatic contributions. Some states do not count regular automatic account deposits or withdrawals as active management.

Finally, keep a list of all your accounts and update it regularly. Tax time might serve as an annual reminder to update your records. And you might want to let your spouse and heirs know where you keep this list so they can track down your assets should you become incapacitated.