Continuing a nationwide trend, South Dakota recently introduced legislation that would reduce the dormancy periods for unclaimed property from five to three years. Specifically, South Dakota’s HB 1270 would decrease the dormancy periods for the following types of unclaimed property:
- Money Orders
- Any sum payable on a check, draft, or similar instrument
- All Banking Property
- All Life Insurance Property (from 4 years)
- All Securities Property Types
- All property held by a fiduciary including IRA property
- Gift certificates and credit memos
- Any tangible and intangible property held in a safe deposit box
- All other property not specifically addressed in the South Dakota’s unclaimed property law
The only type of property unaffected by HB 1270 is traveler’s checks, which retains its dormancy period of 15 years.
South Dakota is the most recent state to attempt to reduce dormancy periods for unclaimed property. Since 2007, 21 other states have passed legislation to do so. To put this into perspective, let’s look solely at the banking industry. In 2003, 36 of the 54 reporting jurisdictions had five-year dormancy periods, while only 12 had three-year periods. Since that time, the numbers have shifted as 30 jurisdictions still maintain a five-year dormancy period, and 21 operate under a three-year period.
These numbers are slightly more drastic for securities property, where the number of jurisdictions operating with a five-year dormancy period has decreased from 36 to 20 since 2001 and the number of jurisdictions utilizing a three-year period rose from 9 to 20 in that same period.
If in fact SD HB 1270 is passed, it will go into effect July 1, 2012. Check back for any future developments on SD HB 1270 and similar legislation.
UPDATE: SD HB 1270 was signed into law on March 2, 2012. The law will go into effect on July 1, 2012, but will not affect the current reporting period ending June 30th. The Holder Reports due by November 1, 2012 will still use the current dormancy periods. All reports due in 2013 will follow the updated dormancy periods. Companies that have filed reports within the past two years will receive a new holder packet with a new dormancy table and forms prior to July 1st.