Time and time again at Keane Unclaimed Property, advisory firms will come to us in an effort to avoid dormant account escheatment by finding a client who has essentially disappeared.
Maybe they’ve moved to a new address without notifying their investment firm, perhaps they’ve removed the IRA from their brokerage account or even passed on. Nonetheless, no matter what the situation, firms are constantly trying to track down clients whose accounts are inactive or even dormant.
Recently, Dave McCrystal, Executive VP of Corporate Development at Keane Unclaimed Property, spoke to IA Watch about the best practices for firms when locating a missing client and the rules for preventing account escheatment.
As we’ve mentioned before, states are becoming hungrier for cash due to economic concerns and as a result are expanding their investigations into unclaimed property by looking at dormant accounts – like bank accounts, savings accounts, etc. For most states, the dormancy period is typically between three to five years of inactivity. Once the states have the money in their possession, however, it is usually allocated for various statewide projects under the assumption the person will never show up to claim the property.
For investment firms themselves, one of the major red flags that a client or customer has an inactive account is returned mail. In order to reduce the risk of account dormancy, firms should correct outdated addresses, check once a year for client activity, comb through client lists and label those who are elderly and at risk of passing on, and make sure they have the contact information for the next of kin for aged clients.
By keeping a close eye on client accounts, businesses should be able to minimize the risk of missing account holders and be more prepared when it comes time to file abandoned property each year.
Contact us to learn more about dormant account escheat rules
View the entire article by Dave McCrystal
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