When Your Abandoned Estate Is Possessed By A State, That's Escheat
AUDIE CORNISH, HOST:
When state governments need cash, they could raise taxes, but that's such a tough sell that more and more states are doing something else to get the money. Audrey Quinn with NPR's Planet Money podcast reports on the practice known as escheat - E-S-C-H-E-A-T.
AUDREY QUINN, BYLINE: Walter Schramm found out about escheat the hard way. Back in the late '90s, Walter ran an online store and was getting totally whomped by a young company, Amazon. He was so impressed with his competition, he invested. He opened a brokerage account and bought a few thousand dollars in the Amazon stock. If you can't beat 'em (ph)...
WALTER SCHRAMM: Join 'em (ph). Exactly.
QUINN: And then, at least as far as the brokerage account was concerned, Walter did nothing.
SCHRAMM: If you believe in a company, you need to buy the stock and let it sit for 20 years. I mean, that's the philosophy of Warren Buffett. Go out and have a walk. Enjoy nature. Talk to your family. Don't worry about the stock market.
QUINN: Cue almost 20 years later. It's 2015. Walter goes to sell the stock. He logs into his account, and...
SCHRAMM: I saw nothing. The account was empty.
QUINN: Walter's stock - which, by 2015, would've been worth about 100 grand - had been escheated by the state of Delaware in 2008. Escheat is when a state government takes possession of unclaimed property and holds it until the rightful owner comes forward. It could be a paycheck you never cashed, a forgotten bank account or, in Walter's case, a stock account he hadn't logged into in over three years. The account Walter believed was growing his nest egg had been closed back when his investment in Amazon was worth only about $8,000. That's what was left for Walter to get back.
JENNIFER BORDEN: I work on cases like that all the time.
QUINN: Jennifer Borden runs an escheat law firm in Boston. She says all across the country, states are getting more aggressive in how they identify property as unclaimed. Some states are shortening the time period in which accounts can be deemed inactive - like in Walter's case, three years. Some have gotten rid of notification requirements for giving people a heads-up their account's about to close.
BORDEN: States are able to use the cash or the assets until such time as the owner comes forward, so it's almost like the state has a little loan they can give themselves of other people's money.
QUINN: Unclaimed property is the fifth largest source of funding for California. It's the third largest source for Delaware, about 12% of the state budget. That's where they liquidated Walter Schramm's Amazon shares. So we talked to the person in charge of escheat in Delaware, Brenda Mayrack. She says states take hold of potentially forgotten money because otherwise, it would just go to the corporations. Escheat at least sends it to a public fund.
QUINN: Why the three years, or why five years? It just - it seems pretty arbitrary.
BRENDA MAYRACK: It needs to be short enough so that companies aren't actually losing track of people and basically taking a windfall of that property or benefiting from their property over time, so it's trying to strike a balance.
QUINN: States used to publish newspaper listings with the names of people whose property they escheated. Now states have websites instead. If you look up the words lost money and the name of any state where you've lived, you can search for yourself on your state's unclaimed property Web site, see if the state has any money owed to you and file a claim. Meanwhile, Walter Schramm's now making his investments through a brokerage firm in Europe, where they don't escheat accounts. For NPR News, I'm Audrey Quinn.
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