As first reported by TaxAnalysts on February 24, 2017, representatives from the American Bar Association (ABA) have indicated that its subcommittee addressing unclaimed property legal issues has decided to move forward with the drafting of a new unclaimed property model act. The ABA had previously made efforts to draft an unclaimed property model act several years ago, but put those efforts on hold as the Uniform Law Commission (ULC) commenced with its redrafting efforts of the existing Uniform Unclaimed Property Act of 1995.
The yet to be defined ABA model act is intended to serve as a clear alternative to the Revised Uniform Unclaimed Property Act (RUUPA), which was adopted by the ULC in July 2016 and finalized in November 2016.
As a refresher, the 2016 Revised Uniform Unclaimed Property Act is the end result of efforts to update the previous Uniform Unclaimed Property Act of 1995. Those efforts began in 2013 and included input from the ABA as well as the National Association of Unclaimed Property Administrators (NAUPA), the Unclaimed Property Professionals Organization (UPPO), the Investment Company Institute (ICI), the Securities Industry and Financial Markets Association (SIFMA), the Securities Transfer Association (STA), the Shareholders Services Association (SSA), the US Chamber of Commerce (USCC), the National Retail Federation (NRF), the American Bankers’ Association (ABA) and other stakeholders.
The 2016 RUUPA has already begun to find its way into state escheat laws. Since the RUUPA was finalized, several states have introduced or enacted legislation that would establish a state unclaimed property act based on the newly revised uniform act. The ABA cites these activities as one of the primary reasons to introduce the ABA Model Unclaimed Property Act as soon as possible – to provide states with an alternative model act that is not bound by the perceived constraints of the RUUPA.
Objections to the RUUPA
The ABA and others have noted specific concerns with the RUUPA, including the failure to provide an overall exemption for gift cards or business to business (B2B) transactions, no prohibition on the use of third-party auditors by states, and the lack of inclusion of the derivative rights doctrine, which implies that the state “stands in the shoes” of the original owner in a custodial manner.
Keane has provided its own analysis of the Revised Uniform Unclaimed Property Act. Our RUUPA Scorecard evaluates some of the most significant provisions and identifies many holder-friendly decisions in addition to those where a different outcome was desired by the holder community.
We will continue to monitor the ABA’s progress in drafting its unclaimed property model act and provide regular updates here on our blog and in KeaNotes, our unclaimed property compliance journal.