KeepUP™ Blog

11/18/22 8:39 AM

Unclaimed Property Legislative Updates in Washington and Maryland

by Clive Cohen and Heather Gabell

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With 2023 right around the corner, we wanted to call your attention to new changes to the unclaimed property laws in Washington and Maryland.

WA S 5531

Washington joins the RUUPA states (states that model their unclaimed property laws on the 2016 Revised Uniform Unclaimed Property Act), with WA S 5531, effective on January 1, 2023. Here is a summary of the key changes:

While dormancy periods generally remain the same, it is important to review property types and trigger dates for escheatment, as those have changed for some property types. All holders should note that that Washington, like other RUUPA states, introduces new property types eligible for escheat, including health savings accounts and custodial accounts, and while a specific dormancy period for virtual currency is not included, the term is defined. Generally, the new provisions follow RUUPA, except Washington uses the current federal RMD age of 72 in the retirement provision. • Insurance companies that submitted a report in the Fall 2022 cycle will be required to report again in April. Going forward, the new reporting due date for all insurance companies will be April 30th of each year, and all other holders will report on October 31st.

Life insurance companies should also note that “knowledge of death” is defined to include an auditor’s DMF comparisons during an examination (and the insurance company validates death) unless the insurance company performed its own comparison during the time period(s) under examination.

• The RUUPA mailing timeframe is adopted for due diligence: 60-180 days before the report is filed, as is the requirement that the holder send the notice by first class mail AND email if the owner has consented to electronic mail delivery from the holder. Content requirements for the notice also tracks RUUPA.

• The statute of limitations period is modified to prohibit an action or proceeding against the holder more than 6 years after the filing of a non-fraudulent report and, with respect to a duty of the holder, no more than 10 years after the duty arose.

• The addition of a 6-year transitional provision requires holders to report any unclaimed property that was not reportable under the old law, but which is now reportable under the new law, for the prior 6-year period, as if the new law had been in place during that time.

MD H 305

• While MD H 305 became effective in October 2022, holders were not required to follow the new law for the Fall 2022 cycle. Holders should note that Maryland added an RPO requirement (returned from post office) to the banking and securities provisions. For financial institutions this signals an important update as financial institutions do not typically track RPOs.

• Additionally, banking and securities property will also require the same pre-presumption outreach that is required in RUUPA, though RUUPA does not require it for banking property (unless they are holding retirement accounts).   Holders of banking and securities property must send owners that have consented to electronic mail delivery an email to confirm owner interest, no later than 2 years from the date of the owner’s last indication of interest. If the holder does not have an email, or the email bounces back, or if the owner does not respond within 30 days, the holder must promptly follow up by first class mail. Note that this is a separate requirement from due diligence.

MD Revised Administrative Rules

• Effective September 19, 2022, the new rules clarify that, for financial institutions, owner activity includes an owner authorizing and establishing an automatic deposit or withdrawal, so long as the authorization has not been cancelled, revoked, rescinded, or otherwise terminated. Automatic deposits of interest or dividends, or the automatic withdrawal of service charges by the financial institution do not constitute owner activity.

In 2023, we expect to see more states introducing RUUPA-like bills. The Montana legislature has a draft request pending for a RUUPA bill (MT D 470) and, while SD S 208 failed, we expect South Dakota to introduce a similar RUUPA-like bill. We may also see additional changes to the newly minted Washington law (see above), as the law could be further updated to incorporate a few provisions from the old law and possibly a few new provisions. Stay tuned!

As an unclaimed property holder, it is critical to monitor legislative and regulatory changes as they happen often and may require holders to quickly pivot and adjust internal systems and resources. Contact Us for assistance with your escheat compliance program related to legislative changes, annual compliance tasks, voluntary disclosure agreements and audit defense needs.

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*Content contained in this article is considered accurate as of the publish date.

Topics: Compliance, Reporting