Many Americans might be surprised to learn that state governments hold more than $100 billion in unclaimed property. This money includes forgotten bank accounts, old paychecks, uncashed tax refunds, insurance payouts, unused gift cards, abandoned securities, utility deposits, and money owed to deceased relatives.
For example, New York holds over $20 billion, California has around $15 billion, and Texas possesses approximately $10 billion. While this is not government money, it belongs to individuals, families, and businesses. However, the system intended to help individuals recover this money is fraught with challenges.
The process starts when banks, insurance companies, or corporations cannot locate the rightful owner of funds. By law, they must transfer the money to the state, which is supposed to safeguard it until claimed. Yet, states often use vague labels such as “over $250,” which obscure the true value of a claim. This makes a potentially significant sum appear trivial, discouraging many from pursuing what is legally theirs.
The reality is that states use these funds to fill budget gaps, finance numerous programs, and improve their financial positions without raising taxes or seeking voter approval.
Some states have even relied on unclaimed property as significant revenue sources. Delaware uses it extensively, while Virginia funds pension plans and literacy programs with this money. Connecticut has used it for election campaigns, and Ohio considered funding a stadium with unclaimed property money.
Claiming unclaimed property is often cumbersome. The process can involve notarized forms, mailed documents, death certificates, probate records, old IDs, proof of address, and other paperwork designed to discourage claims. The longer the money remains unclaimed, the more it benefits the state.
States have little incentive to streamline this process. The idea is straightforward: claim procedures should be transparent and simple. States should present exact dollar amounts and make the system digital. Funds should automatically match with claimants using tax records and databases, and if governments earn interest on the money, they should pay it back to the rightful owners.
Legislation for reform is emerging, with figures like Massachusetts Democrat Sen. Elizabeth Warren seeking answers and reform legislation pending in Congress. However, real changes need to focus on transparency and the recognition that these funds are private property, not public revenue.
It’s time for states to acknowledge that unclaimed property is not a government asset. It’s the people’s money; they deserve to have it returned promptly, without unnecessary hurdles. Unclaimed does not equate to unwanted, nor does forgotten mean forfeited.