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7/28/16 2:50 PM

It’s Mine! Questions of Unclaimed Property Ownership

by Clive Cohen

deciding-unclaimed-property-ownership.pngOn June 13, 2016, Microsoft announced plans to acquire the well-known, business-focused social media site LinkedIn for $26.2 billion. If we can believe Wikipedia, LinkedIn becomes the 196th company Microsoft has acquired since its initial public offering in 1986. Microsoft has also acquired stakes in 65 companies, and divested itself of 31 companies

That means the Microsoft unclaimed property team has taken on more than 200 new sets of unclaimed property problems—and transitioned out of 31. Every one of those M&A transactions had a unique set of conditions and details, including issues related to ownership of the property. It may seem simple. Isn’t property owned by the person whose name is on the property record? In most cases, that’s true, but if an owner can’t be found, the state of ownership might have changed.

This is just one potential ownership-related issue that can be encountered during the processing of unclaimed property. Below are several other ownership issues you might come across, along with some caveats and advice to help you get ownership right

Mergers and acquisitions

If your company acquires or merges with another company, it may take some time to understand the state of the new company’s unclaimed property records. To get to the bottom of ownership, it’s a good idea to make no assumptions and complete due diligence yourself if you are going to take responsibility for escheatment. On the other hand, the best recourse may be to include resolution of all outstanding unclaimed property as a clause in the contract before the transaction is completed.

Clear, complete reporting

First and foremost, when escheating unclaimed property, it’s important to ensure that all details associated with the property are included on the state reports. If a property owner tries to recover the property from the state, any clues to the identity of the owner will help the state verify ownership and reunite the owner with their property.

Relationship codes

Another problem sometimes encountered by owners when they attempt to claim their property is incorrect relationship codes. It can be confusing to choose correct codes—or it might not seem important. But using the wrong code can make it difficult for the owner to claim the property. The state may have no choice but to refuse the claim, which isn’t great for public relations.

Property codes

As with relationship codes, property type codes also can lead to ownership disputes after escheatment. Here are a few property type codes that are commonly misunderstood and used incorrectly in state reports.

Commonly disputed assets and their codes

(from page 17 and 18 of the NAUPA Reporting Manual for Property Type Codes)

Property Type

NAUPA Code

Bank accounts

AC01, AC02, AC03

Insurance

IN03, IN04

Mineral and Royalty Assets

MI

Stock/Equity Assets

SC

For your convenience, here’s a link to the National Association of Unclaimed Property Administrators (NAUPA) Reporting Manual codes.

Rule of thumb to mitigate unclaimed property ownership issues

A property owner tends to be the entity/person shown on the books and records of the holder, but certain conditions can exist that make it difficult to determine who the rightful owner of a property is. Likewise, your use of owner information, relationship codes and property codes can make ownership difficult to verify after escheatment when an owner attempts to claim the property from the state.

Follow this rule of thumb to ensure unclaimed property is associated with the correct owner before or after escheatment: Take nothing for granted! Make sure your own records are as accurate and as complete as possible. And make sure you are reporting fully and precisely. Where uncertainty exists, involving an experienced escheat consultant can provide clarity and direction.

Topics: Due Diligence, Reporting