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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Advancing Growth and Change - 2013 UPPO Annual Conference

Posted By Administration, Sunday, February 10, 2013
Updated: Friday, February 8, 2013

The theme for the 2013 UPPO Annual Conference couldn’t be more appropriate for the unclaimed property profession. "Change” seems to be about the only constant that requires unclaimed property professionals to grow their knowledge and maintain compliance, in order to help protect a company’s bottom line.

The conference – which is being held in San Diego, March 24-27 – is three days of education and networking, as well as an opportunity to meet with service providers to the unclaimed property industry. The conference offers three tracks based upon the attendee’s expertise; basic, intermediate and advanced. This year there are also opportunities to hone "soft skills,” with sessions on public speaking, understanding others, being a better manager and building a broader professional network.

The event begins Sunday, March 24 at 2:00 p.m. with three "pre-conference” sessions; Unclaimed Property Boot Camp (basic), Getting Your Point Across: Public Speaking Methods and Technologies (all levels) and Pros and Cons of B2B (Intermediate/Advanced). Following these sessions, there will be a welcome reception and a UPPO Gives Back charity event to kick off the conference in rousing fashion.

The next two-and-a-half days will feature a full slate of educational topics that are listed in the conference agenda. Several of the "hot topics” will include the following:

· "Have I Got a Deal for You!” – Internet deals such as Groupon, Living Social and others pose new questions and implications. This session will discuss how these sites work and how the states view these types of transactions.

· "How Dodd Frank Impacts Unclaimed Property” – How does this Act, passed in 2010, impact your organization?

· "govSPEAK” Forum – A panel of state unclaimed property administrators will discuss activities for their various states and respond to your questions, while Delaware Secretary of State Jeffrey Bullock will highlight his state’s new VDA program.

· Speak "UP”: Looking into the future to predict the five most significant events that may impact unclaimed property.

New this year is the UPPO Scholarship Program 5K Fun Run/Walk on Monday, March 25 beginning at 5:45 p.m. All proceeds from this event will benefit the UPPO Scholarship Program.

We invite you register today and join hundreds of your colleagues in San Diego to get the latest information and education for unclaimed property professionals. If you have questions, please contact Jackie Cote or Ashley Hennig.

ADDITIONAL RESOURCES
Members as Mentors Webinar – January 2013 (members only)
UPPO Events


The analysis and opinions expressed herein are those of the authors and do not necessarily represent the views of the Unclaimed Property Professionals Organization or its officers, directors or members. This summary document provides background information and is not intended as a substitute for legal advice.

Tags:  education  Members  Service Providers 

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Third Party Due Diligence Services for UP Holders

Posted By Administration, Sunday, February 3, 2013
Updated: Friday, February 1, 2013

There is little doubt that managing a company’s unclaimed property can be a full time job. With the complex statutory and regulatory requirements, not to mention the tracking of property for dormancy, the subsequent due diligence to attempt to locate the property’s owner and the mandatory state reporting, for many unclaimed property professionals it is more than a full time job! Because of the very nature of managing unclaimed property, many UP professionals elect to use the services of a third party vendor to assist them in managing the process.

There are number of third party service providers, many of them members of UPPO that offer a wide array of services. Whether you want them to manage the entire process or just portions of it, you have a number of options available.

What are the BENEFITS of using a third party due diligence service provider?

  • First and foremost, you don’t have to know the legal requirements in every state. Service providers take over the burden of staying current on the ever-changing legislative and legal requirements in all states and jurisdictions.
  • Using your data from any open accounts, they run it against a matrix based on property type, statutory requirements and other factors to track property and determine when it becomes dormant (eligibility).
  • If your internal process is to locate property owners PRIOR to dormancy (pre-escheat), many providers will assist with that process.
  • When property is deemed dormant, they can perform the required due diligence, in accordance with applicable laws, to attempt to reunite the property with its rightful owner.
  • Tracking and responding to the communications with property owners is a critical piece in the due diligence process. Service providers can offer a variety of options including validation of the response; handle any subsequent transactions, etc.
  • Most providers are able to do all of your reporting, regardless of whether you report to one state or multiple states and jurisdictions.
  • Many will respond on your behalf to questions and/or inquiries made by unclaimed property administrators pertaining to filed reports.

What are some CONCERNS about using a third party due diligence service provider?

  • As with any service, it can be a matter of cost. It is important to determine the return on investment for your organization.
  • Sensitive client/customer data must be provided to the service provider for them to do their job. Data security is a key component when researching any of the providers.
  • Some UP professionals feel a loss of process control. It is critical that you understand how the provider will communicate with you to assure the process is being handled to your satisfaction.

Here are few things to consider if you’re looking for a third party due diligence provider.

  • How to they track legislative, regulatory and legal activity?
  • What type of indemnification do they provide to you?
  • If there are any types of errors in the due diligence or reporting process, will they pay any penalties?
  • What industries do they have experience in? Insurance, securities, banking, utilities, etc.?
  • Can they demonstrate they clearly understand what triggers dormancy and how "contact” is defined? In some cases there may be dual triggers so it’s important to be sure they understand your specific industry.
  • When they send due diligence letters on your behalf, do they use generic letters or letters formatted specifically to state statutes? Will they use your letterhead or stationery?
  • Will they perform the entire process for you and/or allow you to select specific processes? For example, they track your accounts, perform the necessary due diligence when a property type is deemed dormant, but you handle the reporting to the state(s).
  • What type of security processes and systems do they have in place to protect your sensitive data?
  • Will they respond on your behalf to inquiries from unclaimed property administrators regarding reports?
  • What type of flexibility do they have to respond to the owner?
  • How will they communicate with you to assure your standards are being met? What’s the frequency of reporting? If they are handling any transactions with property owners on your behalf, how do they reconcile with you?
  • How flexible is the company in working with you the first year versus successive years and does their fee structure accommodate the various volume levels? For example, if this is the first year you’ve reported, the volume may be much larger than it will be in subsequent years.
  • How flexible are they in providing responses to inquiries by owners?
  • Can they do address verification in advance of sending any letters to help reduce costs? If a potential owner has multiple properties, can they list them all on a single letter rather than individual letters?
  • As with any service, it is important to check references, both current and past clients. Be sure there are at least two or three from your industry.
  • Are they members of the Unclaimed Property Professionals Organization?

As an unclaimed property professional, it is your job to assure the organization’s compliance with unclaimed property requirements. Using the services of a third party due diligence provider can protect your company from an unclaimed property audit and impact the bottom line.

A number of services providers that assist with unclaimed property due diligence will be exhibiting at UPPO’s 2013 Annual Conference in San Diego, March 24-27. If you haven’t registered for the conference yet, it isn’t too late. If you are registered, be sure to check out the exhibits while you’re there!

ADDITIONAL RESOURCES
UPPO Members' Only Resource Page
Suggested Google Search Terms to Find 3rd Party Due Diligence Providers:

  • Unclaimed Property Consulting
  • Unclaimed Property Due Diligence Services
  • Escheatment Consultants


 The analysis and opinions expressed herein are those of the authors and do not necessarily represent the views of the Unclaimed Property Professionals Organization or its officers, directors or members. This summary document provides background information and is not intended as a substitute for legal advice.

Tags:  Due Diligence  education  members  Service Providers  UP101 

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Legislative and Regulatory UP-date: A Fast Start for the New Legislative Season

Posted By Administration, Monday, January 21, 2013
Updated: Friday, January 25, 2013

Legislative and Regulatory UP-date – A Fast Start to the New Legislative Season

Unclaimed property professionals understand that unclaimed property compliance can be a daunting task, especially if they are required to report to multiple states and jurisdictions. With no federal preemption for unclaimed property laws and regulations, keeping up with the ever-changing legislative and regulatory landscape can consume much of their time to assure they maintain compliance.

As state legislatures have returned to session, we have seen a flurry of activity in the unclaimed property legislative and regulatory arena. To assist our members with tracking legislative, regulatory and legal changes, the Unclaimed Property Professionals Organization (UPPO) tracks bills introduced throughout the United States and Canada and reports important information to our members weekly.

There are several key areas monitored weekly:

  • Appropriations
  • Dormancy Periods
  • Due Diligence
  • Gift Cards/Gift Certificates
  • Mineral Rights
  • Penalties and Interest
  • Reporting
  • Stored Value Cards
  • Miscellaneous

During the past two weeks 25 pieces of new legislation have been tracked and reported to our members through govWATCH, a weekly briefing on legislative and regulatory matters impacting unclaimed property. Of all the activity, perhaps the most watched piece of legislation concerns Delaware’s VDA program, which is being managed through the Secretary of State’s office.

Delaware House Bill 2 was introduced in early January and was passed Thursday, January 24, 2013 by the DE General Assembly on Thursday, January 24, 2013. H.B. 2 creates additional incentives for holders of abandoned property to report such property to the state and promptly resolve such claims. The bill expands the new voluntary self-disclosure program administered by the Secretary of State and enacted by the 146th General Assembly to further incentivize participation in the program.

  • Section 1 clarifies the existing duty of the State Escheator to protect confidential information by confirming that the existing duty covers the entirety of Chapter 11.
  • Section 2 amends 1177(b)(1) to provide holders that elect into a voluntary self-disclosure prior to June 30, 2013 up to one additional year to enter into an agreement and make payment or enter into a payment plan.
  • Section 3 amends 1177(d)(2) to clarify that a holder that has previously entered into a voluntary disclosure agreement prior to June 30, 2012 may enter into the new voluntary disclosure program with respect to any related party that was not included in an earlier voluntary self-disclosure or with respect to property types and/or periods that were not included in a prior voluntary self-disclosure agreement.

Delaware’s Secretary of State Jeffrey W. Bullock will be participating in a panel discussion at UPPO’s 2013 Annual Conference in San Diego, March 24-27. In addition to Secretary Bullock, the govSPEAK panel will also include unclaimed property officials Gary Qualset of California, Larry Schilhabel of Texas and Kelly Kuracina of New York. The govSPEAK session will take place on Wednesday, March 27 from 8:00-9:30 a.m. Pacific.

ADDITIONAL RESOURCES
UPPO’s govWATCH Program

UPPO News – Legislative and Legal sections

UPPO Members as Mentors Webinar, Jan 9. DE VDA Program (free to UPPO members)


This information is not intended as a substitute for legal advice on compliance or reporting requirements.

Tags:  Education  Members  Service Providers  UP Laws  UP101 

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Whose Property Is It, Anyway? – A Brief History of Escheatment Law

Posted By Administration, Sunday, January 20, 2013
Updated: Friday, January 18, 2013

Children may be fond of the phrase "finders keepers, losers weepers” but unclaimed property professionals know this is rarely the case and state escheatment laws are never as simple as calling "dibs” on abandoned assets.

So, where did our confusing patchwork of unclaimed property laws originate and how has it evolved over the years?

Blame Our Forbearers

Like many time-honored American traditions (whiskey and fried food come to mind immediately), the concept of unclaimed property was first established in feudal England. The term "escheat" derives from the Latinex-cadere ­– meaning "to fall out.” Under English common law, any lands held "by tenure” (i.e., occupied by someone other than the owner) were returned to the feudal lord upon the death of an heirless tenant.

The idea behind escheatment laws was simple: when a landholder died, went to war or was convicted of a crime and imprisoned, his property reverted to the landowner in order to ensure its continued productivity and to prevent "squatters” without inheritance rights from usurping land that did not belong to them.

Following the Norman Conquest of England, the monarch became the sole "owner" of all the land in the kingdom, a position that persists to the present day. The king then granted land to his favored followers, who became"tenants-in-chief,” under various contracts of feudal land tenure. Such tenures never conferred ownership of land but merely ownership of rights over it. This distinction between ownership and stewardship of unclaimed property would be a hallmark of later U.S. laws.

Seems logical enough, right? All land belongs to the state (or in this case the crown) and reverts back to the crown once the holder is dead or otherwise loses his claim to the property.

Early common law forms of escheatment applied only to real estate – the concept of bona vacantia ("ownerless goods”) emerged many years later as a statute provision governing personal property without a clear heir.

Crossing the Pond

Inspired by English common law and the Magna Carta, property rights are among the most uniquely important elements of U.S. law, so important that they were codified in the Fifth Amendment of the U.S. Constitution.

The philosophical basis for U.S. escheatment law is not as clear as its feudal roots, but 19th century writings indicate the principles are similar, with individual states taking the place of feudal lords and the monarchy. William Draper Lewis, the dean of the University of Pennsylvania’s Department of Law in 1898, wrote:

"It is a general principal in the American law…that when the title to land fails from defect of the heirs and devisees, it necessarily reverts or escheats to the people, as forming part of the common stock to which the whole community is entitled…and the lands vest immediately in the state by operations of law.”

Over the years, there have been several statutory changes to U.S. unclaimed property laws, many resulting from court challenges in the 1930s and 1940s. The first nationwide unclaimed property law debuted in 1954 and was drafted by the Commission on Uniform State Laws. This model Act was commonly known as the Uniform Disposition of Unclaimed Property Act (UDUPA), but it soon became apparent that multiple liabilities (with different escheatment laws being applied to the same property holder doing business in different states) would be problematic.

Goin’ Through Changes

UDUPA has since been superseded, first by the Revised Uniform Disposition of Unclaimed Property Act (RUDUPA – 1966) and later by the 1981 Uniform Unclaimed Property Act (UUPA) which would be adopted by 26 U.S. states, the District of Columbia and the U.S. Virgin Islands. The 1981 Act was the most comprehensive of all in that it not only included various definitions for certain property types, but this Act also included language that would give the state the right to create an estimated liability in the absence of records. It also included penalties, interest and audit cost provisions and a records retention requirement.

Revised in 1995, the Uniform Act was broadened to include additional property types (such as gift cards, royalties and mineral interests); and the new Act doubled the penalties and audit fees for failure to comply with the laws. The 1995 Act also shortened dormancy periods and generally streamlined the process of escheatment for both holders and state regulatory agencies.

Modern wrinkles continue to challenge unclaimed property administrators, holders and associated service professionals, such as lawyers and accountants. The advent of Internet gift cards, paycards and other newly created forms of intangible personal property has caused many states to update their escheatment laws. But the primary foundation in which these laws were drafted has remained unchanged since the 1950s – reversing the old "finders keepers” adage in favor of a new approach: a virtual, state-by-state "lost and found” box.

For further reading:

Escheatment Laws and Regulations (from coveringcredit.com)
Unclaimed Property Laws, Compliance and Enforcement (Adreoli/Spotswood-CCH)

Unclaimed Property Laws and State Authority (Bureau of National Affairs)

The U.S. Securities and Exchange Commission (SEC) Escheatment Page


This information is not intended as a substitute for legal advice on compliance or reporting requirements.

Tags:  FAQs  Policy  UP Laws  UP101 

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Voluntary Disclosure Agreements (VDAs): Weighing the Pros and Cons

Posted By Administration, Sunday, January 13, 2013

Voluntary disclosure agreements, or VDAs, are commonly used to pro-actively and voluntarily report unclaimed property assets to state regulatory authorities. All states encourage holders of unclaimed property to file their unclaimed property reports voluntarily, as it allows states to generate revenue that it may not have had if a holder hadn’t come forward to disclose its liabilities.

VDA programs can be either informal or formal, depending on the state. States also understand that not every holder is knowledgeable in the area of unclaimed property, so state administrators are often willing to work with a business once it has become aware of its unclaimed property reporting obligations.

What are some of the benefits of entering into a voluntary disclosure agreement? Here are just a few:

  • The ability to control the review
    • Determine property types
    • Manage the property
    • Review procedures to assure they are adequate to comply with the unclaimed property requirements
  • The look-back period is usually shorter and/or limited than that of an audit
  • Usually provides for an abatement/reduction of interest and penalties
  • Establishes a rapport with the state administrator
  • Provides indemnification against claims filed once the property is accepted by the state(s)
  • Allows for additional time to submit reports

What are the possible drawbacks to VDA programs?

  • Must complete the due diligence and reporting within the timeline afforded by the VDA
  • Must maintain unclaimed property compliance moving forward after completing a VDA

Most VDA programs are available to holders unless one of the following applies:

  • The holder is currently undergoing an unclaimed property audit
  • The holder has been contacted by a state or a third party auditor retained by a state
  • The holder has not previously reported or has omitted/under-reported property

UPPO recommends contacting the state(s) where your company is required to file to determine the specific details (please note you may inquire anonymously, if you prefer).

 

Resource links


This information is not intended as a substitute for legal advice on compliance or reporting requirements.

Tags:  Education  Members  UP101 

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