For all practical purposes, management of abandoned or unclaimed joint ownership accounts is the same as managing a single-owner account. The same documentation, dormancy periods, due diligence requirements and other legal responsibilities apply. Complete and accurate information is the key to properly documenting, tracking and reporting the property.
In fact, when an account about to become unclaimed property is owned by more than one person or entity, a holder’s ability to find the owners actually improves. In most cases, it’s possible to contact one of the owners and determine the whereabouts of the other owner or owners. That isn’t always the case, though.
Owners may have become estranged, or in some cases they may have been given joint ownership without having received contact information for one another. This happens when property is inherited by a number of siblings or they are named co-beneficiaries without knowing it. When some of the owners are missing and one of the joint owners takes possession of the entire property, the process becomes slightly more complicated than when it’s a single owner.
Documenting payment/reporting of jointly owned unclaimed property
The ideal goal for holders is to find owners to whom they owe property (money) and return it. Returning property is better for everyone, including the holder, who is likely to be seen as caring about customer service if the money is returned. When property is jointly owned, it ideally would be returned to all joint owners. However, sometimes it’s not possible and one owner agrees to take possession of the property on behalf of all owners.
Standard Unclaimed Property Codes for Joint Ownership
The National Association of Unclaimed Property Administrators (NAUPA) publishes and periodically updates a list of standard codes to use when reporting to any jurisdiction. The list is included in a publication called “NAUPA Standard Electronic File Format.” States have a choice which codes to require in their own unclaimed property laws, and some choose to use unique codes not represented in the NAUPA publication.
For joint owners, the most common relationships represented by NAUPA codes are And (AN), Or (OR), and And/Or (AO). Additional relationship types are defined for other joint ownership and multi-owner situations, such as an insured/beneficiary on an insurance policy. Additional NAUPA codes that may be used for joint ownership properties include AN, CP, JS and TC.
When holders deliver all joint ownership property to one owner, it’s important to receive a documented release from any further obligation. If this is not done, the holder could be sued by other owners if they come forward later, and the holder could be made to pay an additional amount. Many holder companies have their own documentation requirements. However, escheatment documentation requirements of a particular state can provide a guide for the appropriate level of documentation when returning property to owners.
There’s a similar need for documentation when holders deliver jointly owned property to the states to fulfill unclaimed property obligations. The holder must make sure complete and correct information for all owners of a particular piece of property is provided to the unclaimed property jurisdiction. If the information is incomplete, the holder could be sued by an owner not represented in the data and be made to pay an amount over and above the original obligation.
Accurate coding of joint ownership relationships
There are many scenarios under which multiple owners might become associated with a single property. The owners could be beneficiaries, trustees, joint owners, etc. For the purposes of unclaimed property compliance, accurate coding of the relationships is important. If codes are used improperly, it can result in a return of the report by the jurisdiction, which could cause missed deadlines with accompanying penalties.
Most states follow standard coding guidelines provided by the National Association of Unclaimed Property Administrators (NAUPA--see sidebar), but some states define their own unique codes. There are both property type codes and relationship codes, which reflect the type of owner.
Choosing a code for multiple owners can be more complex than with a single owner, because there are more options. Most relationship types represented in the codes are straightforward and easy to understand, but if you’re unsure how joint ownership should be represented in a specific situation, check with the jurisdiction or with your unclaimed property advisor.