KeepUP™ Blog

On April 29, 2020 Vermont joined the growing group of states that has adopted RUUPA, when the governor signed HB 550, an act relating to unclaimed property (“Act”) into law.  The Act is effective January 1, 2021.

The Act updates Vermont’s current unclaimed property law, and it is largely based on the revised model act produced by the Uniform Law Commission (ULC) in 2016. This act repeals Title 27, chapter 14 (Vermont’s current unclaimed property law) and replaces it with a new chapter 18.

The highlights of the new legislation include expanding record retention requirements, adjusting due diligence requirements, allowing use of extrapolation and statistical sampling for the failure to retain records and providing a transitional provision.

In late 2016, the Uniform Law Commission (“ULC”), with the input from state unclaimed property administrators, holders, and holder advocates, completed an update to the Uniform Unclaimed Property Act, entitled the Revised Uniform Unclaimed Property Act (“RUUPA”). Since the release of the RUUPA, four states, Delaware, Illinois, Tennessee, and Utah have adopted some form of the act. The acts adopted by Delaware and Illinois made significant changes to prior legislation and MarketSphere has covered those in previous blogs, Delaware Governor Signs Legislation to Overhaul their Unclaimed Property Laws and Illinois’ New Unclaimed Property Act – Impact on Business to Business Transactions. 

In 2017, Nebraska, Maine, Minnesota and Vermont have proposed bills to adopt RUUPA. And, kicking off  2018, the District of Columbia and state of Washington have proposed legislation to adopt the 2016 RUUPA. 

The recently proposed bills for both the District of Columbia and Washington include changes to definitions, including additions of property types, changes to what constitutes contact with an owner, and various other updates consistent with the 2016 RUUPA. 

In late 2016, the Uniform Law Commission (“ULC”), with the input from state unclaimed property administrators, holders, and holder advocates, completed an update to the Uniform Unclaimed Property Act, entitled the Revised Uniform Unclaimed Property Act (“RUUPA”). The first uniform unclaimed property act was drafted in 1954 as a guideline that each of the states could use to help draft their own state unclaimed property laws.  The uniform act was subsequently revised in 1981 and again in 1995. Currently 39 jurisdictions have adopted either the 1981 or 1995 act uniformly, while 14 others have a non-uniform act in place.

On January 27, 2017, the Delaware House of Representatives passed Delaware Senate Bill 13 (“S.B. 13”), finalizing Delaware’s legislative body’s fast-track effort to overhaul the state’s unclaimed property laws.  The bill will now be sent to Governor John Carney, who has indicated he will sign it. The legislature’s approval of S.B. 13 is a much anticipated development in the unclaimed property world, as Delaware attempts to address the scrutiny it has endured over the last few years, which culminated in July 2016 with the critical decision in the Temple-Inland case.  Although S.B. 13 addresses many of the areas on which corporations and unclaimed property practitioners have been seeking guidance, a few key issues in the current Delaware act have yet to be addressed.  Following are some of the key changes for those areas the Senate Bill has definitively addressed.

Look-Back Periods, Statute of Limitations, and Record Retention

One of the main areas of contention with Delaware’s escheat act has been its audit look-book period and statute of limitation provisions.  As Delaware’s act is currently written, a holder may be subject to a reach-back period of 20+ years, which is especially problematic because such a lengthy audit reach-back period typically far exceeds generally accepted corporate document and data retention policies.  In recognition of this clear misalignment, S.B. 13 stipulates a 10 year look-back period for ongoing and future audits.  The look-back period is based on the calendar year in which the Delaware audit notice was mailed to the holder.  Accordingly, the look-book period for holders already subject to a Delaware audit will vary depending on the age of the specific audit.  To ensure consistency, the look-back for the Voluntary Disclosure Agreement (“VDA”) program will also be amended to 10 years.  We note that this change for VDA’s merely represents a codification of what occurred administratively this past summer following the Temple-Inland decision.

Under S.B. 13, the statute of limitations increases to 10 years from 3 years (or 6 years in cases where a report contained an omission of unclaimed property that was more than 25% of the value disclosed in the report).  This 10-year statute is tolled if a holder is placed under audit or if the Delaware State Escheator determines that the report contained a fraudulent or willful misrepresentation.

If you believe state unclaimed property laws are backed by federal law, you would be in good company. When someone first becomes involved in unclaimed property, it’s common to assume the protection of property owners would be something the federal government would want to govern.

In fact, the precursor to modern unclaimed property laws—English Common Law—was all about the rights of the kingdom to claim abandoned property. But if you believe there is federal law backing state unclaimed property laws, you would be wrong. The United States federal government hasn’t passed unclaimed property laws.

Question: If that’s the case, then where does state jurisdiction in this matter come from?

Highlights of ULC Discussion at UPPO

In February, the Uniform Law Commission submitted a new draft of the Revised Uniform Unclaimed Property Act (RUUPA) after months of discussing, negotiating and adjusting. As with other drafts, this version of the RUUPA was prepared after receiving input from unclaimed property stakeholders across the industry.

Property becomes statutorily defined as abandoned or unclaimed when a certain period of time has gone by without any contact taking place between the holder and the property owner. Property can't become abandoned if an owner is aware of it and has demonstrated interest in it. For this reason, owner contact may be one of the most important questions being discussed for the upcoming Revised Uniform Unclaimed Property Act (RUUPA).

Two elements of owner contact are the triggers that determine whether property becomes unclaimed: 1) method of contact and 2) date of last contact (DLC). These two elements are forever intertwined, because only a valid method of contact can prove when a last contact took place.

Valid methods of unclaimed property owner contact

One of the disagreements connected to the owner contact updates in the new act has to do with whether certain types of activity related to an unclaimed property item prove the owner's knowledge of the account.

Back when the only ways we had to contact each other were by U.S. mail, phone or fax, it was easier to prove an owner's knowledge of the property.

New Jersey recently introduced legislation to reduce the abandonment period for travelers checks from 15 years to three years. This is just one in a long line of reductions in unclaimed property dormancy periods that make up a bothersome trend. What’s the motivation for this? Many people believe reduced dormancy periods for unclaimed property are clearly an attempt by states to add money to shrinking budgets without having to raise taxes.

MarketSphere was on hand at the recent UPPO conference in Orlando to meet with clients, teach sessions and absorb the general unsettled state of the industry. A number of important issues rose to the surface. Here are two of the most hotly discussed topics:

At MarketSphere, we like to keep our clients up-to-date with the latest changes in unclaimed property to help them anticipate and manage any issues, opportunities or requirements that might affect them. Currently, unclaimed property in general is being affected within two active spheres of change: Canadian provincial law and the American standardization of state statutes.