Of course we did business; you have my money.

Frequently, the New York State Comptroller will request proof of a claimant doing business with the reporting company that escheated the funds. Acceptable proof, according to the Comptroller, may be a copy of a bill, statement, paystub, W2, stock certificate, insurance policy, etc.

And many folks who have lost funds will not be able to provide such documentation. Why would they be able to provide a connection to an old account they may have never even known existed, or have lost touch with for years?

The reason for the request may technically be justifiable, however it is not reasonable. And it will be issued without providing any valuation for the accounts you seek to collect; making it impossible to determine if it is even worth the effort - A running theme when dealing with unclaimed funds in NYS.

Fortunately, there are multiple ways to overcome this obstacle. As professional unclaimed money recovery experts in business for over 15 years, we have had to invent creative solutions. Here are few tried and true options one could implement with their claim.

In lieu of the requested documentation, you could attempt to connect yourself to the old registered address (see our previous post regarding proof of address). While not guaranteed to satisfy the Comptroller, it does throw the ball back into the hands of the claim processor. It forces them to make an ethical decision. “Do I want to deny this claim again, when I know the money obviously belongs to this claimant?”

You could track down the original holder of the unclaimed funds, or the record keeping agency that was responsible for the escheat. You can request, sometimes at a cost, that they to research and locate the old account details; more specifically to securities, you want to obtain a Line-Item Report. The cost is $50 usually, and will require follow up; letters, phone calls, emails, etc. Persistence pays off and you may obtain the necessary documentation that satisfies the Comptroller.

Alternatively, you could prepare a Statement of Claim laying out the facts of your entitlement and incorporating the proper language asserting a claim to the unclaimed funds, and holding the Comptroller harmless. Essentially, this is an affidavit establishing ownership, which would need to be notarized.

Each claim is unique and there is no guarantee that any of these methods will result in success; but if it is your money, you should go and get it - or let us get it for you.

Proof of a connection to the address

So, you’ve taken the initiative to reclaim an account from the state. Aside from asking them for your money back, you’ve fought through the discomfort of sharing sensitive information to prove you are who you say you are. You gave them your current address and your phone number. Your date of birth and social security number. You even had your signature notarized – a formality with the express purpose of proving you are exactly who you say you are.

But instead of receiving a check for your money, you receive a letter from the State requiring that you show proof of your connection to the address the account was registered to. The problem is, you haven’t lived there for years. You’ve moved numerous times since and you’ve made it a point not to hold onto old papers for any longer than seems reasonable.

Now, the fate of your money lies in finding a document with your name and the old address on there. So, what now? Does the State just get to keep my money, even though you know the account is yours and you’ve proven as much thoroughly? The answer to this question, frustratingly enough, is yes, they do get to keep the money.

Asking for the seemingly impossible bears the markings of a devious tactic implemented by the State to hold an owner’s money hostage forever, or until their demands are met. Outrage is not the wrong reaction, but it won’t turn the tide in your favor either. The State’s role, as it sees itself, is as the custodian of lost money. They are tasked with the job of safeguarding your money and making sure it isn’t released to the wrong person.

There are a certain categories of unclaimed funds that may not have any affiliation with the traditional information that would identify an owner, such as social security numbers or birthdates. For instance, for assets classified as refunds - perhaps from a utility company or an insurance provider – they often stem from uncashed checks to the owners. And in these instances, the name and address at the time the check was issued may be the only points of identification the State has to reference for these types of accounts.

Of course this doesn’t lessen the frustration of being asked for something you don’t have and have no idea how you would get. Believe us, we get it. What follows are some anecdotes that arose from just this scenario and demonstrate how some out-of-the-box thinking has helped some of Fletcher’s clients find what they were looking for in some unexpected places.

1.      BACK TO SCHOOL

When the NYS Legal Services Division put eyes on a claim for one Fletcher client, one of the items they insisted on having was proof of his connection to the address his uncollected dividends from an IBM stockholding had been registered to. When we relayed this to him, he was exasperated and at a total loss for how he’d come up with said proof given that he hadn’t lived there for 30 years. “Not since I was in high school”, he offered, grudgingly. After initially throwing his hands up in frustration, it dawned on him that his high school might be the key to establishing the connection. He called the main office and spoke with a secretary, and within the week he had a copy of his transcript from his senior year. And on there, was his name and the address for the home he had grown up in.

If you attended any school for any length of time, there is most likely an accessible record of it. The legal requirements for school record retention varies from state to state, from as little as 5 years in Wisconsin to a minimum of 100 years in Massachusetts. But as was the case for this client, his high school transcript became the bridge to his distant path (and to his money).

2.      SOLD

When Fletcher relays the news that the State’s approval of their claim is pending on their proof of an old address, it’s not uncommon to hear something along the lines of, “I sold that house years ago”. If that happens to be the case, you’re in luck. We always recommend pulling out the closing documents from the sale, of which there is never a shortage of. The Deed of Sale, the mortgage satisfaction documents, and title insurance will all have the previous owner’s name and the address in question.

But even if you no longer have the documents from the sale of the property, the records are still accessible. In New York State, real estate conveyances are recorded by county with the respective County Clerk’s Office, or in New York City with the Register’s Office. Some have online searching options, as is the case for NYC (https://www.nyc.gov/site/finance/taxes/acris.page), but all will provide information on accessing the property records. Again, Fletcher has had scores of clients over the years satisfy their connection to an old address they had previously owned by digging up the sale and transfer documents.

3.      VITAL RECORDS

But while showing proof of a previously-owned property offers a paper trail that can be picked up with relative ease, finding a link to an old rental can be much more elusive. Even in the most formal of rent arrangements featuring lengthy lease agreements and broker fees, nothing is formally recorded with a government agency to memorialize the transaction. So, when it comes time show you lived at a rental from your past, sometimes a more comprehensive memory sweep is required.

Old IDs, tax returns, employer records or paystubs are handy in the event you’re inclined to hold onto items like that. But few people do, not indefinitely. And physical paper retention is trending ever downward now that so much of our documents are digitized. One client’s creative solution to this prompted Fletcher to always ask clients if any major life events took place while they lived in the former apartment. By “major life events” we mean the birth of a child, the death of a family member or perhaps a serious medical event, all of which generate documents, and often times the rare ones we aren’t inclined to discard.

This particular client’s claim was held up on the State’s requirement to show proof of an old apartment she’d lived at in the Bronx some 17 years ago. She quickly ruled out having any of the more traditional documents in her possession, such as an old driver’s license or lease agreement. But at this time, she also happened to be helping her daughter register for her learner’s permit. In doing so, she had pulled out her birth certificate and noticed that one of the items of information on the certificate happened to be the mother’s physical address. In this case, it was the former apartment in question – where she had resided at the time of her daughter's birth.

Since then, we always encourage frustrated claimants to try and recall what may have been happening in their life at the time they resided at the old address. Sometimes, there were events that took place monumental enough to have yielded a document you wouldn’t be inclined to get rid of.

There is some power in being able to see the back-and-forth of the claim process as a game. The opponent, who also makes the rules, has an incentive to hold your money and make the process of reclaiming it difficult and discouraging. This is by design. But like any game, having an experienced player in your corner can tip the odds in your favor.

Self-custody and the end of unclaimed funds.

When an entity possesses an asset of financial value, and cannot deliver that asset to its customer, that asset eventually becomes subject to unclaimed property laws which require it to be turned over to the state government to hold as a custodian until the owner can be reunited with the asset.  This is a broad, general definition of unclaimed funds.  And, as we have stated in the past, by our calculations the amount of value sitting unclaimed on the books of various governmental agencies as a result of the unclaimed property laws easily exceed one hundred billion dollars.

Government Unclaimed Property Acts claim to be “custodial” acts which deal with the right of states to take custody of abandoned property to hold indefinitely for the benefit of the owner.  The official stance, as stated by the uniform law commission (ULC) responsible for drafting this legislation is, “… that these laws have substantial differences from the historic law of escheat, in which the state succeeds to legal ownership of the property with no obligation to return it to the previous owner or to anyone claiming to have derived title from or through the previous owner.” 

And while technically this may be true, if unclaimed funds are being held for the benefit of the owner, one has to question the enactment of authority which allows for securities to be liquidated; interest rates to be capped, if paid at all; and outreach efforts far dwarfed by audit efforts designed to marshal increasingly more money for the state.  And why are Uniform Gift to Minor (UGTM) accounts being seized at all when the minor has not reached the age of majority?

If we are being honest, there was a proper place for unclaimed property law in society.  Private corporations have proven that they will abscond with their customers’ assets if given the opportunity.  The examples are endless, but most recently notable are life insurance companies, who were recently caught red handed:

Life insurance companies have been caught and penalized for holding death benefits valued at billions of dollars that they knew were matured policy benefits.  Metlife had $500 million alone:

 https://www.latimes.com/business/la-fi-mo-metlife-20120423-story.html

Allowing the state to custody these unclaimed sums made sense in a democracy, where we have government for the people by the people; but at some point, the civil servants in charge of these programs, who are supposed to be working for the people, stopped considering the individual and their freedoms and property rights, which are being violated by these unclaimed property programs.

We strongly doubt, that Administrators are sincere when they say the principal focus of their office is to reconnect unclaimed property with owners.  The data just does not back up this notion.  More money is brought in than paid out every year.  More money is spent bringing in money, than paying it out.  The ULC has said as much, “In the current economic climate, some states are looking for more money, and some legislators and governors are squeezed between the demands of constituents for services and the resistance of voters to tax increases. For some states, unclaimed property has become money available to make up revenue shortfalls.”

The ULC states that Administrators of the unclaimed funds programs at the state level, “…recognize that they are under a duty to seek to locate owners and that unnecessary requirements that frustrate or delay the return of unclaimed property to owners has no place in the context of a custodial unclaimed property act.”  But as we all know, actions speak louder than words, and once again the evidence just does not back up these claims.  We increasingly see regulations being imposed that do nothing but frustrate the success of claimants and their professional representatives.  The data continues to shows that half of all claimants fail to recover their funds.

We discuss all of this background to the unclaimed property landscape as a segue into our hypothesis that the adoption of self-custody of financial assets will end the existence of Unclaimed Property Administrations; and it will happen quicker than most folks realize.  The rapid ascension will shock state governments with a loss of revenue, and they will do everything in their power to prevent this freeing technology from hampering what really amounts to a scheme to bring in more money than has to be paid out.  And when the money coming in dries up, these programs will not have sufficient capital to pay the existing claims.  The law will likely then change to permanent escheat, otherwise these states are going to have to find money to replace these absconded sums.

In its simplest form, self-custody technology allows the individual to control their personal property, or money, as a digital asset without an intermediary.  We already have electronic money for the vast majority of our transactions, but with an intermediary such as a bank, a brokerage firm, an insurance company, or a federal wire service.  With self-custody, there is no need for these intermediaries.  All monetary transactions can occur virtually, person to person, for extremely low costs.  The front end will look just like a mobile app; but the back end will have military grade encrypted technology; and the result will be more freedom and lower expenses for individuals around the world. 

There are estimates that as many as 22% of US households are either underbanked, or completely unbanked.  This technology will provide the ability for all of these folks to control their own financial power.  No more expensive check cashing, payday loans, or international payment transfers; as these services will all be virtually free.  And it is many of these folks who currently are being negatively affected by the unclaimed property laws.

And because the individual is the custodian, these structural powers that control finance will be disintermediated.  One result is that money is never unclaimed, nor can it ever be seized by a company, or a government.  Hence, the end of the majority of the utility of Unclaimed Funds Administrators around the globe.

Self-custody is the future of finance.  You will no longer need to keep your assets with a bank.  This means you have total control of your assets.  Of course, letting go of the habit of keeping your money with bank is daunting and adoption will start slowly and then suddenly be the norm; adoption of this new technology will follow traditional technology adoption curves; think cell phones, digital music; streaming video, etc.  These services won because they reduced costs for the individual, and made transactions faster and better; and this is will happen with money too.

So, what happens if the individual is locked out of their self-custody wallet (the future equivalent of unclaimed funds); maybe due to death, illness, or some other unknown future cause of loss.  Well, the first order effect is that the value of their holdings is now bequeathed to the entire community by default.  This is because a truly decentralized monetary network does not allow for the creation of additional monetary units, without the permission of the users of that network according to a predefined, immutable set of laws, and so any lost assets create more value through the increased scarcity of all of the remaining available assets.  It will automatically, and at no cost, achieve one of the primary defenses of the benefit Unclaimed Property Administrators.

The technology also allows for programmable assets to exist.  So, when an individual sets up a self-custody wallet, they can make provisions for their asset’s eventuality, such as nominated beneficiaries or any desirable path for their monetary energy.  No longer will the individual have to worry about a long-term investment they made be liquidated without permission.  There are also solutions being developed to allow multi-signature access to self-custody wallets, which would allow for borrowing and lending.

Corporations burdened by the time and expense of compliance with these unclaimed property statutes will learn to utilize this technology too.  Reporting requirements will vanish, as no individual will ever have lost or abandoned funds.

This new technology offers perfect money for so many additional reasons, in this instance, it is because, only truly unclaimed assets go back to benefit of the community, and with no administrative costs. 

In fact, if we are correct, the adoption of this technology will end this company’s service offering forever.

Small Estates and the Voluntary Administration Conundrum

Recovering unclaimed funds in the custody of NYS, which are held in the name of a deceased individual is often a difficult and complicated process.  While we can speculate as to the reasons why the process has become overburdensome, we will instead demonstrate a classic example below, and provide some important characteristics about the process.  In preview, unless the amount to be collected is significant, or alternative creative options for recovery are available, abandoning the claim and keeping your sanity is a reasonable decision.  Maybe it’s not a speculation as to why the most logical choice made available by NYS is to relinquish your claim and let the State keep your money.

It had been over 5 years since Dad died when you found his name in New York State’s Unclaimed Property database. As far as you had known, everything had been cleaned up. At the time of his death, there had been no real property and he’d lived out his final days in assisted living. Any accounts in his name had one of his kids registered as a joint owner or beneficiary, so settling his affairs had been simple enough with no need for probate. Curious as to what this could amount to, you initiate the claim as his next-of-kin. Several weeks later, you receive a letter from the Comptroller’s Office. It turns out that Dad had 20 shares of MetLife stock and some dividends that had accrued from the stockholding. All in, the claim amounted to about $1,600 - not too shabby. Among the list of items in the letter the state is requiring before releasing Dad’s money is currently dated Letters of Administration – a completely foreign term – and that obtaining this will require contacting the Surrogate’s Court in the county where he had last resided. Already, the initial luster of the found money is wearing off as you project the time you’ll have to find so you can dig into this.

Unsurprisingly, a large number of deceased claims go unfinished in light of the amount of work involved. But why does it have to be so difficult to collect accounts for a deceased parent? It didn’t used to be. At least not always. In the past, small estate affidavits were accepted by New York State Office of Unclaimed Funds (NYSOUF) on a far wider scale. This is a simple form which authorizes the transfer of the deceased individual’s assets directly to another individual(s), effectively bypassing the need to petition a court. In recent years, Fletcher has observed a major uptick in the frequency of Letters of Voluntary Administration being required prior to the release of a decedent’s unclaimed funds. This translates to a lot more people opting to abandon a claim they had started for a deceased relative (decedent) and the money remaining with the state, forever.

By nature, a deceased claim is more involved and will almost always unfold over multiple steps. The steps required will vary depending on how much money is at stake. If it is determined that the total value of a decedent’s account(s) does not exceed $50,000, then the claim is within the threshold of what is considered a small estate in New York. If so, then the term Voluntary Administration will almost certainly come up in NYSOUF’S subsequent list of requirements needed to complete the claim. A Voluntary Administration (Voluntary) is the term for a small estate proceeding within the New York court system.

Before discussing the Voluntary at length, it’s worth noting that in select circumstances, the unclaimed assets may be eligible for release by way of a Small Estate Affidavit. Examples of when this may be an option is when the claimant is a surviving spouse or when the claimant acts as a creditor seeking reimbursement for funeral expenses, they came out-of-pocket for; but the acceptance of these alternate options is not uniformly offered.

So, if a Voluntary is in the cards NYSOUF has dealt you, there are some important distinctions to understand that make this process very different from the use of a small estate affidavit. First off, while the latter is used to transfer a decedent’s property directly to another person, a Voluntary Administration formally establishes an estate in the decedent’s name. This means that at the point when the claim is approved, the funds will not be issued directly to the individual acting as the claimant, but instead to the decedent’s estate. Because the estate is a separate entity, this requires a bank account to be opened in the name of said estate, and opening a bank account requires a Tax ID Number (EIN) for the estate which needs to be applied for and issued by the IRS. (The EIN is also needed by NYSOUF prior to releasing the funds to the estate). This tends to catch a lot of claimants off guard. Even after they have taken the trouble to obtain a Certificate of Voluntary Administration from the respective Surrogate’s Court and gotten an EIN, many are still confused when they receive a check payable to an estate rather than themself.

Another major point is that a Voluntary Administration requires the petitioning – and ultimately the approval – of the court. In New York State, all estate matters are overseen by the Surrogate’s Court. Each of New York’s 57 counties has their own. The appropriate Surrogate’s Court to petition for a Voluntary Administration would generally correspond with the county the decedent resided in. This is an important detail, as the place of residence is not always consistent with the place of death. If Aunt Jean resided in Westchester County but happened to die at a hospital in the Bronx, the claimant would be petitioning the Westchester County Surrogate’s Court as opposed to that of the Bronx.

In theory, doing a Voluntary Administration is DIY friendly. The court fee is only $1 and the necessary forms comprising the petition can be found online. The link below offers an overview of the process provided by nycourt.gov:

https://www.nycourts.gov/courthelp/WhenSomeoneDies/smallEstate.shtml

While the Voluntary Administration is used in all 57 New York counties for dealing with small estates, there are nuances that may fluctuate from county to county that can make getting it right on the first go around tricky. For example, most of the county Surrogate’s courts will require a Family Tree Affidavit, which lays out the descendants or “distributees” of the decedent. However, there are a number of counties that insist that this particular form is not executed by the petitioner, but instead by a disinterested third party – which would be someone who does not stand to inherit from the estate. Depending on how much time has lapsed since the decedent’s death, many counties will expect an Affidavit of Delay to be included with the petition and other prescribed forms. If possible, visiting the court or speaking with a clerk is useful.

Things can get extra complicated if the decedent had a surviving spouse who died subsequently. Let’s say that you need a Voluntary to collect some accounts belonging to Dad, but Mom died a few years after he did. What typically happens in these instances, assuming the petitioner is a child and that neither parents had estate proceedings, is that he/she will need to become appointed as the Voluntary Administrator for the post-deceasing spouse first – Mom, in this instance. New York State inheritance law guarantees the first $50,000 of a decedent’s estate to go to the surviving spouse, which would make Mom’s estate the distributee. So after, and only after, you are appointed as the Voluntary Administrator for Mom’s estate can you petition to become the Voluntary Administrator for. Fletcher has seen this numerous times. The work is doubled and of course the time of the claim’s resolution is extended accordingly.

Some other points worth mentioning:

-          An affidavit attesting that the petitioner has never been convicted of a felony is one of the required documents in the Voluntary petition. In the event of a past felony, the petitioner is disqualified from eligibility to be appointed as the Administrator.

-          A paid funeral bill is a required document. This is a requirement of basic due diligence for the court to rule out the most common of estate creditors. Most funeral directors are happy to provide this. Some only hold onto records for 7 years or so. In the event they cannot produce the paid invoice, most will confirm in writing they have no records of outstanding debts from the decedent’s funeral.

-          While the filing fee is only $1, that’s basically where any perceived generosity from the court ends. Envelopes and postage are required for the petitioner’s certificates and the distributees’ waivers that the court will need to mail out. So, if you’ve personally come in to the court to hand deliver your petition without postage, there will likely be a return visit in your future.

 Fletcher sees a lot of Voluntaries as a biproduct of our recovery service. It is important to note that we are not lawyers, nor are we offering legal advice. But we are intimately familiar with what goes into a successful Voluntary petition, and can offer some guidance in navigating the process and avoiding many of the pitfalls. And while the court system can be rigid, we have found some room for creativity where others would have probably thrown their hands up and called it a day. Fletcher has can also help in locating missing distributees, whose unknown whereabouts will stop a petition dead in its tracks until the individual has been located. But given the volume of work that goes into a Voluntary, the amount of money at stake is a consideration. And if the state is requiring a Voluntary to collect $300 of a relative’s money, walking away probably isn’t the wrong decision.