Upwards, July 2010- What’s UP in the Digital World?

A fundamental premise of unclaimed property law is that it is better that property be held by a state for the general good of the public than be held by an individual entity for singular enrichment. That premise presupposes that the property itself be subject to state unclaimed property laws. Historically, states have considered traditional types of intangible property, such as bank accounts, payroll checks, and stock certificates, as unclaimed property, and generally, the escheatment of that property is undisputed. But more recent forms of property do not enjoy that simplicity. For example, the high-tech world in which we live and practice is creating new forms of property that are fast outpacing traditional notions of unclaimed property. In this edition of UPwords, we take a brief look at the future of unclaimed property law and its implications for the modern economy.

Technological Advances

Technological advances have led to the creation and sale of new forms of digital and virtual property. While those advances are happening at an increasing pace, it is fair to say that unclaimed property laws are not nearly as adaptable. The introduction of digital property in the undefined unclaimed property universe has exposed the law’s rigidity, stretching the limits of traditional unclaimed property jurisprudence. Whether that tension has arisen as a result of states’ aggressiveness in expanding the law in order to fit (or grab) the newly created digital property, or whether digital property types are even covered under the existing unclaimed property net is a larger debate — a debate that is similar to what is developing in the courts in McKesson Corp. v. Cook.1

Certainly not all property is subject to state unclaimed property laws, and this article will not try to distinguish what digital property is unclaimed property under the existing laws. The purpose of this article is to identify issues that have begun to be discussed in the unclaimed property profession — a sure sign that controversy will follow. ‘‘Digital codes’’ and ‘‘online accounts’’ are terms that will inevitably dominate the unclaimed property discourse of the future. It will take years however for states to address those property types and for state efforts to be fully vetted through the judicial and legislative process.