Unclaimed funds refer to money or other assets whose owner can’t be identified. In most cases, it is connected with false contact information of the owner or the absence of information. After a certain period of time, banks, insurance companies and other institutions transfer all unclaimed funds to the government. If the owner or beneficiary wants to get unclaimed money back, he or she must make a request for payment of a sum of money. If the owner intends to keep money belonging to the estate, he or she needs to gather documents confirming the right to the property or other assets.
Unclaimed Funds explained
Most unclaimed funds and assets go missing in the first place because of the bank failures as individuals who had a banking relationship with the bank may be unaware of the closing and lack contact information. Unclaimed pensions, also known as one of the types of unclaimed funds, appear when an organization shuts down and customers have no details about the administration of their regular income.
Unclaimed property refers to the property the rights to which haven’t been proved for a certain period of time. After this period ends, the state can consider a property abandoned.
The dormancy period varies from state to state and may last up to 5 years. Real estate, securities or funds — this all will become the property of the government if the owner does not start the claim process.
Abandoned property may include uncashed payroll checks, inactive securities, etc. Property accounts go missing for various reasons. Sometimes account holders get sick, move to another place, pass away or just forget about it.
Abandoned property is exempt from taxation as it is not considered as an income. Nevertheless, if the owner gets access to the unclaimed property, the government is able to levy a tax on it.
To cite an example, an average taxpayer makes estimated tax payments throughout the year and requests refunds for the overpayment of taxes to his home address. The citizen may change his address and not inform the agencies before they approve the refund and are ready to send it. The refund is generally mailed to the last known address. If the owner doesn’t receive it, the refund meets the definition of unclaimed funds.
The owner should later apply for it, confirm that the refund check belongs to him and give a new address.
Searching for Unclaimed Funds
There are several ways of finding unclaimed funds. First of all, a person can fill in an application form in state agencies with a request to find any unclaimed money associated with specific names.
The second option is to get access to an online database and check the status of a refund. Most databases of this type allow you to search by surnames and names. A citizen can make a call to the IRS hotline if 21 days or more have passed since he e-filed or more than 6 months have passed since he mailed the paper return. However, online services are more convenient and less expensive for customers.
A lot of people are unaware of the fact that government agencies are prohibited from contacting the owners of unclaimed funds or assets to offer their services. All the details about people owed money can be found on the Internet and this is a great opportunity for scammers to illegally obtain money from citizens by deception by contacting them.
Not all abandoned assets are held by the government. For instance, many people leave funds untouched on gift cards for years or they have deposits that have expired but are not claimed by the owners. Quite a decent sum of money may be collected on the deposits. Unclaimed funds or property held by companies should be turned over to the government or to the owner (if it’s possible to identify the rightful owner).