By law, you have an obligation to make a reasonable effort to locate the rightful owners of unclaimed or abandoned property before it’s turned over to the state. This process is called due diligence.
Here’s a breakdown of your responsibilities:
- Identifying Dormant Property: Unclaimed property refers to money or assets that haven’t been accessed by the owner for a set period of inactivity, as defined by your state’s regulations. This can include dormant bank accounts, uncashed checks, unpaid customer refunds, or safe deposit box contents.
- Following Due Diligence Requirements: Each state has its own unclaimed property laws, which dictate the specific steps you need to take to find the owner. These requirements typically involve:
- Timeframe: Determining the dormancy period after which property becomes unclaimed. This can range from one year to five years, depending on the type of property.
- Notification: Making a good faith effort to contact the owner through a first-class mail notification sent to their last known address on record. Some states might require additional measures like public advertisement.
- Record Keeping: Documenting your due diligence efforts for future reference.
It’s important to note that due diligence is an ongoing process. Even after reporting unclaimed property to the state, you may be required to respond to inquiries from the rightful owner if they surface later.
Due Diligence for Unclaimed or Abandoned Property Can Be Complex
While the concept of due diligence seems straightforward, complying with state-specific regulations can be quite intricate and time-consuming. Factors like:
- Multiple State Requirements: If your business operates across multiple states, you’ll need to navigate the unique unclaimed property laws of each jurisdiction.
- Varying Property Types: Different rules may apply to different types of unclaimed property, adding another layer of complexity.
- Evolving Regulations: Unclaimed property laws are constantly being updated, requiring you to stay informed about any changes.
Partnering for Compliance
Due to these complexities, many businesses choose to partner with specialized Unclaimed Property Compliance providers like UPCR. Through our partnership, we can help you with:
- Understanding State Regulations: Ensuring you’re following the correct due diligence procedures for each state you operate in.
- Streamlining the Process: Automating tasks like address research, notification generation, and recordkeeping.
- Reducing Risk of Non-Compliance: Mitigating the potential for penalties and reputational damage associated with non-compliance.
By working with our team at UPCR, you can ensure that you’re fulfilling your legal obligations while saving valuable time and resources.