Unclaimed Property Administration — Taking Advantage of Uncertainty

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In this installment of UPwords, we suggest that with the increased attention surrounding unclaimed property law and the states’ aggressive posture toward unclaimed property as a source of revenue, holders of unclaimed property should prepare as never before to vigorously and confidently challenge the states’ administration of unclaimed property laws. We support this suggestion through an exploration of two significant recent cases — one an unclaimed property holder victory and the other an example of a property holder aggressively defending its position on audit. These cases demonstrate the imperative for unclaimed property holders to take an active role in the development of state unclaimed property law to ensure its fair application and administration.

The roots of unclaimed property law are ancient — tracing back at least to the Roman Empire and the concept of caducam. Over time these laws developed with the economy, eventually leading to the promulgation of the unclaimed property uniform acts and their variations that have been adopted by the many states. Even so, it was not until 1951 that the U.S. Supreme Court in Standard Oil v. New Jersey1 solidified the broad power of the state to take custody over abandoned property. In Standard Oil, the Supreme Court held that New Jersey’s unclaimed property laws were constitutional as applied to stock and dividends that had been abandoned for 14 years. The Court echoed existing precedent and established the most fundamental premise of modern unclaimed property law — unclaimed property is better held by the states for use for the general good than held by an individual for a singular enrichment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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