Unclaimed Property Legislative Trends and Highlights 2013-2014 2014 NAST Treasury Management Training Symposium E. Suzanne Darling, Esq., Vice President, Xerox 2014 Xerox Corporation. All rights reserved. Xerox and Xerox and Design are trademarks of Xerox Corporation in the United States and/or other countries.
Top Ten Reasons Why Unclaimed Property Legislation is an Important Topic 2
10. You just really like to be in the know 3
9. Your family and friends are always asking about it 4
8.You want to be able to impress your bosses and colleagues with your vast knowledge 5
7. You need to know about it to answer questions on standardized tests 6
6. It makes you a more well-rounded person 7
5. It s frequently a category on Jeopardy 8
4. Knowing about it gives you that certain je ne sais quoi 9
3. It s all the rage in Hollywood 10
2. There s money involved 11
1. You never know when the subject will come up at a cocktail party 12
Life Insurance and Death File Matching DMF legislation passed in 2013 and prior was based primarily on the NCOIL model The NCOIL model requires: Periodic comparisons of policies, annuities, and retained asset accounts against the DMF Verification of potential matches against other sources Determination of benefit status Attempt to locate beneficiaries Reporting of property, plus accrued interest, if no beneficiary can be located Nine states enacted a DMF law based on the NCOIL model by the end of 2013 13
Life Insurance and Death File Matching DMF legislation in 2014 was based on a widely circulated draft backed by insurance companies including significant changes to the NCOIL model - Most of these bills: - Require DMF matching only for policies issued after the effective date or - Only require DMF matching prior to the effective date by companies that made asymmetrical use of the DMF Either qualifier excludes a large segment of the population of policies, annuities, and retained asset accounts Bills based on this model have been introduced in 11 states 14
Life Insurance and Death File Matching DMF legislation in 2014 has been enacted to date in Georgia Indiana Kentucky Mississippi GA (HB 920): Applies to policies issued or renewed on or after January 1, 2015 IN (SB 220): Language limiting DMF comparisons to policies issued after the effective date of the act (2015) was removed KY (HB 414): Amends the NCOIL model law passed in 2013 but does not include asymmetrical or prospective only language MS (SB 2796): Includes some extreme provisions 15
Life Insurance and Death File Matching MS (SB 2796): - Establishes the sole standards by which unclaimed property statutes are applicable to payments for life insurance death benefits regulated by the Department of Insurance - The Insurance Commissioner has exclusive authority and jurisdiction to examine records of insurers to determine if they have complied with unclaimed property laws 16
Life Insurance and Death File Matching Status of other DMF legislation - Bills are awaiting Governor s action in Iowa and Tennessee - Bills are pending in Louisiana, Oklahoma, Pennsylvania, and Rhode Island - Bills did not pass in Maryland Other bills may still be introduced 17
Escheat of US Savings Bonds In 2000, Kansas enacted a law for the escheat of US savings bonds 3 years after presumed abandonment. The State takes title to the bonds by instituting a civil proceeding in state court. Kansas recently became the first state to be allowed by the US Treasury to redeem US savings bonds after following this escheat procedure in state court Other states are now using the Kansas model to pursue the escheat of US savings bonds 18
Escheat of US Savings Bonds Legislation to escheat US savings bonds was passed in Iowa (SF 2283), Kentucky (HB 445), Mississippi (SB 2796), and South Dakota (SB 138) The Kentucky bill also reduced the dormancy period for property held by the federal government or any federal agency from 5 to 3 years Savings bond escheat bills are pending in Louisiana and Missouri 19
Escheat of US Savings Bonds The escheat process generally: A civil proceeding is instituted in state court Notice is given to parties known and unknown If no one makes a claim, or a claim is rejected, the bonds escheat to the state The state redeems the bonds Claimants may file claims pursuant to the regular claims process 20
Aggregate Reporting CA (AB 1275): The aggregate amount is reduced from $50 to $25 IL (SB 1988): The aggregate amount is reduced from $25 to $5 In both states the due diligence threshold remains unchanged 21
AGGREGATE AMOUNTS NONE $50 $100 Idaho Puerto Rico $5 Illinois $20 New York $25 California Colorado Nebraska Vermont Alabama Arkansas Arizona Connecticut District of Columbia Delaware Florida Georgia Hawaii Iowa Indiana Louisiana Maine Michigan Missouri Montana North Carolina North Dakota New Hampshire New Jersey New Mexico Nevada Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Virgin Islands Washington Wisconsin West Virginia Wyoming Alaska Kansas Kentucky Massachusetts Maryland Minnesota Mississippi Virginia 22
Reporting Requirements NC (HB 257) Instead of an affidavit, a holder shall file with its report a certification and verification of compliance with due diligence The verification may also be filed electronically TX (34 TAC 1.13.13.21) Reports shall be filed in NAUPA2 format via a specified online method Incomplete reports and reports not meeting specifications will be rejected Encrypted, corrupted, or inaccessible reports will be rejected A rejected report shall be resubmitted within 30 days or the holder will be considered delinquent and subject to interest, penalties and criminal charges until the corrected report is submitted 23
Claims CA (AB 1275): Claims may only be filed by an owner The person who had legal right to the property prior to escheat The person s heirs or estate representative The person s guardian or conservator A public administrator acting pursuant to authority under the Probate Code OH (OAC 1301: 10-4-01): Any person who claims a property interest in unclaimed funds may file a claim The Director shall consider matters relevant and is authorized to subpoena witnesses and documents The Director may hold a hearing and shall hold a hearing if requested by the claimant 24
Claims IN (SB 208): simple interest shall be paid on claims to interest bearing property based on average commercial rates for similar interest bearing property types during the period the state held the property State payment of interest on claims generally: 25 jurisdictions pay some type of interest on claims 28 jurisdictions do not pay interest on claims 25
Interest on Claims No Payment of Interest on Claims: Alabama Montana Arkansas Nebraska California Nevada Delaware New Hampshire District of Columbia North Carolina Florida North Dakota Georgia Oklahoma Illinois Oregon Iowa Pennsylvania Kansas South Dakota Kentucky Texas Maryland Utah Michigan Vermont Minnesota Wyoming Payment of Interest on Claims: Alaska New Mexico Arizona New York Colorado Ohio Connecticut Puerto Rico Hawaii Rhode Island Idaho South Carolina Indiana Tennessee Louisiana Virginia Maine Virgin Islands Massachusetts Washington Mississippi West Virginia Missouri Wisconsin New Jersey 26
Claims MO (15 CSR 50-3.095): All or part of an allowed claim may be irrevocably donated to one or more specified trust funds or charitable organizations WI (AB 801): Where an unclaimed property owner is a debtor under the debt setoff program, all setoffs against the debt shall be paid If the remaining value of the unclaimed property is $2,000 or less, the owner shall be paid without having to file a claim If the remaining value is more than $2,000, the owner shall be advised in writing about the property and may file a claim for its return 27
Confidentiality IN (SB 208): Date of birth, driver s license number, taxpayer identification number, employer identification number, and account number Information in an unclaimed property report or claim is exempt from disclosure NC (HB 257): To protect owner privacy, information subject to public inspection is limited to owner name and last known address and address of the holder that reported the property 28
Examinations MI (HB 4289): Examinations must be performed in accordance with generally accepted auditing standards to the extent applicable The auditee shall be provided a complete copy of the audit report The auditor may use a reasonable method of estimation when the auditee does not have substantially complete records If the auditee has filed all required reports and has maintained substantially complete records, the examination shall not be based on an estimate Substantially complete records means at least 90% of the records necessary for examination purposes but includes a component of materiality of the records 29
Questions?? 30