Not-So-Safe-Deposit Boxes: States Seize Citizens’ Property to Balance Their Budgets
May 15th, 2008Via: ABC News:
The 50 U.S. states are holding more than $32 billion worth of unclaimed property that they’re supposed to safeguard for their citizens. But a “Good Morning America” investigation found some states aggressively seize property that isn’t really unclaimed and then use the money — your money — to balance their budgets.
Unclaimed property consists of things like forgotten apartment security deposits, uncashed dividend checks and safe-deposit boxes abandoned when an elderly relative dies.
Banks and other businesses are required to turn that property over to the state for safekeeping. The problem is that the states return less than a quarter of unclaimed property to the rightful owners.
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California law used to say property was unclaimed if the rightful owner had had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money.
“That’s absolutely correct,” said California State Controller John Chiang, who inherited the situation when he came into office. “What we’ve done here over the last two decades has been dead wrong. We’ve kept the property and not provided owners with the opportunities — the best opportunities — to get their property back.”
Chiang now faces the daunting task of returning $5.1 billion worth of unclaimed property to people. Some states keep their unclaimed property in a special trust fund and only tap into the interest they earn on it. But California dumps the money into the general fund — and spends it.
