Unclaimed property due diligence letters provide proper notice to the apparent owner of abandoned or unclaimed property in an attempt to resolve the item before the item is remitted to the state. For this reason, the letter should not only be designed to notify the owner that the property is outstanding, but also how and when the property can be claimed. Due diligence letters are required by most states but like most unclaimed property regulations they vary by state.
This post will analyze the key elements of an effective unclaimed property due diligence letter to both ensure compliance with state escheat laws and to maximize the return of property to owners. While state requirements differ in some respects regarding the content of the due diligence letter, there are some important elements required by almost every state.
Key Elements of an Unclaimed Property Due Diligence Letter
California, for example, requires very specific language that must appear at the top of the letter: “THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US”.
California also requires the header warning to be centered at the top of the letter. Previously, the warning was to be located in the top right corner of the letter. Keane recommends updating your templates accordingly to ensure they can be used for multiple jurisdictions while maintaining compliance.
Unique Identifier and Property Amount
A unique identifier is the number or designation that identifies the property and the value of the property. For an uncashed check, the unique identifier would be the check number and the value would be the dollar amount for which the check was written. Other unique identifiers may include an account number, claim number, or well/lease number.
Deadline to Take Action
The letter should include a time frame during which the apparent owner must contact the holder to prevent the property from escheatment. States typically require that the owner be given at least 30 – 60 days from the receipt of the letter to contact the holder.
Many states require the due diligence letter to include a statement that explains that if the the apparent owner fails to take action, the property will be escheated to the State after which the owner may still claim the property from the State.
Owner Disposition Options
For certain property types, the apparent owner receives choices regarding the resolution of the property in question. For example, with an unclaimed property savings account, the apparent owner has the option to have the value of the account paid to them and close the account or to maintain the account.
Change of Address Form
While not a statutory requirement, Keane recommends including a space within the form for the apparent owner to provide an updated address. This allows the holder to either return the property to the owner or merely update the account owner’s address.
Owner Verification Requirements
To verify that the recipient of the unclaimed property due diligence letter is indeed the apparent owner, some holders include a request that the apparent owner provide information verifying their identity. For example, the letter may request that the owner provide the last four numbers of the owner’s social security number. Some holders include attestation language and a signature line requesting that the owner read and sign and then return the executed letter. Owner verification is not a state requirement; however, utilizing these techniques is seen as a best practice.
Holder Contact Information
The letter should include information about how to contact the holder and we recommend including more than one contact method. The letter could indicate that the owner must sign and return the letter via United States Mail and/or contact the holder via telephone or email.
Certain states, such as California, Delaware, North Carolina, and Utah require specific language within the due diligence notice. At Keane, we utilize a single due diligence letter template that is compliant in all jurisdictions and put this language within the footer. Be sure to consult with the specific jurisdiction to ensure you have the most up to date language in your templates.
Letters Ready? What’s Next?
Optimizing your organization’s unclaimed property due diligence letters for both compliance and response is merely one half of the due diligence process. Facilitating the actual mailing of the letters and managing the returned owner responses must also be completed by holders.
Many organizations are not well equipped to manage large scale mailing or customer service operations and therefore choose to outsource their due diligence processes as well as their analysis and final reporting operations. For additional information on the benefits of outsourced unclaimed property due diligence mailings and reporting, we invite you to download our complimentary whitepaper.
Keane Compliance Update: This post was originally authored in June 2016 and has been updated to include new information regarding due diligence notices.