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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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Legislative & Regulatory UP-date - Second Quarter

Posted By Guest Author - Marcella Easly, GRAC member, Sunday, July 7, 2013
Updated: Sunday, July 7, 2013

UPPO’s Government Relations and Advocacy Committee (GRAC) provides a brief Regulatory UP-Date approximately once per quarter. The first post for calendar year 2013 was posted May, 2013 – Regulatory UP-Date, the Story So Far. The following a brief list of the legislative activity for April – June.

UPPO members receive the latest Unclaimed Property Legislative and Regulatory information on a weekly basis through their member benefit, govWATCH.  

DEVELOPMENTS FOR INSURERS

Alabama HB192 - Under existing law, certain insurers are required to search the death master file and notify the State Treasurer of any unclaimed life insurance benefits or unclaimed retained asset accounts, plus interest, to the State Treasurer. This bill requires certain insurers to search the death master file shall apply only to life insurance policies, annuity contracts, and retained asset accounts issued and delivered in this state and which are issued or entered into on or after January 1, 2016.

Montana SB34 - Creates unclaimed life insurance benefits act; requiring insurers to search the death master file. Effective January 1, 2014

Nevada AB226 - Enacts provisions governing certain policies of insurance, annuities, benefit contracts and retained asset accounts. Requires an insurer to notify the State Treasurer upon the reversion by escheat of a benefit under a policy of life insurance or an annuity and transfer to the State Treasurer the unclaimed benefit as soon as practicable after providing notice. Effective July 1, 2014

New Mexico SB312 - Requires insurers to make good faith efforts to locate beneficiaries and provide claim materials; provides that unclaimed benefits escheat to the state; clarifies that certificates of property or casualty insurance are not insurance policies; specifies terms for certificates of property or casualty insurance. Effective July 1, 2013

North Dakota HB1171 - Establishes Unclaimed Life Insurance Benefits Act, requiring insurers to search the death master file. Lowers dormancy period from three years to one year for unclaimed life insurance policies or annuity contracts. Effective August 1, 2012.

Vermont HB95 - Establishes payment and escheatment of life insurance benefits. Effective July 1, 2013

STORED VALUE AND GIFT CARDS

Connecticut SB912- Prohibits linked prepaid cards from expiring unless specific disclosures are clearly stated. Effective July 1, 2013

Indiana HB1081 - Exempts stored value cards, credit cards or debit cards issued by state or federally chartered financial institution from unclaimed property reporting requirements. Effective July 1, 2013

Texas HB3068 - Prohibits surcharges on debit or stored value cards. Effective September 1, 2013

BANKING AND FINANCIAL INSTITUTIONS

Indiana SB222 - As amended, provides that certain property left unclaimed in a safe deposit box for three years (down from five years) is presumed abandoned. Permits electronic submission of certain documents in connection with unclaimed property, and permits the attorney general to determine the manner in which payment or delivery of certain property is made. Authorizes the attorney general to deduct certain expenses from proceeds of property paid to the owner. Effective July 1, 2013

Louisiana HB348 - Limits time to bring an action against an FDIC insured holder of unclaimed property; limits the time an FDIC insured holder is required to maintain unclaimed property reports. Effective June 12, 2013

MINERAL RIGHTS

South Dakota HB1002 and HB1006 - Creates trust account for lost mineral interest owners. Effective July 1, 2013

Texas HB724 - Creates commission to study unclaimed land grant minerals proceeds. Requires escheatment to the state. Effective September 1, 2013

PROCESS AND PROCEDURE

Florida SB492 - Requires property held by fiduciaries under trust agreements to be reported as unclaimed after 2 years dormancy. Effective October 1, 2013

Hawaii SB1265 - Limits unclaimed property finder fees to 25% of the total property value. Effective October 1, 2013

OTHER RESOURCES
UPPO govWATCH
2013 HOLDERS SEMINAR - CHICAGO, August 14-15


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:  Advocacy  Compliance  Gift Cards  Insurance  UP Laws 

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The Final Countdown: Just under two weeks remain for holders to enter Delaware’s new VDA program and take advantage of 1996 look-back period

Posted By Guest Author - Brenda Mayrack, Mayrack Law, LLC, Monday, June 17, 2013
Updated: Monday, June 17, 2013

It’s June 18, and holders have just a little less than two weeks remaining to participate in Delaware’s new Voluntary Disclosure Agreement (VDA) program and take advantage of the most favorable terms for holders. To participate, holders must submit Form VDA-1, the "Disclosure and Notice of Intent to Voluntarily Comply with Abandoned Property Law Pursuant to 12 Del. C. § 1177,” by June 30, 2013.

Delaware established this new VDA program in July 2012, with the passage of Senate Bill 258. The new program offers qualified holders the opportunity to achieve current compliance with the advantage of shorter look-back periods, less liability, and less risk of audit in a program managed by the Delaware Secretary of State, instead of the Department of Finance, which oversees reporting, owner claims, examinations, and its own ongoing VDA program.

In January 2013, the Delaware General Assembly, with the enactment of House Bill 2, expanded the scope of eligibility for holders to participate and extended certain deadlines, making the new VDA program even more favorable for holders. For more information, refer to this prior UPPO Focus Blog Post.

As Delaware Secretary of State Jeffrey Bullock has repeatedly noted, including in this prior UPPO Focus Guest Blog Post, the new Delaware VDA program is intended "to build on Delaware’s business reputation and specifically the reputation of the Department of State in providing quality service to Delaware’s corporate clients by making abandoned and unclaimed property compliance for Delaware companies cheaper, faster and easier.” Holders electing to participate, according to Secretary Bullock, should find a process that is "reliable, efficient, cost-effective, and most importantly, fair.”

Holders who do join the new VDA program by the end of this month will be able to achieve current compliance for any past due unclaimed property liability and apply a shorter look-back period – to transaction year 1996 – in their submission. In an audit context, Delaware looks back to 1981 to determine liability, and in prior years when the VDA program was managed by the Department of Finance, Delaware has looked back to 1991. Thus, for most holders, the new VDA program will offer a significant opportunity to come into current compliance for a smaller settlement amount.

Holders entering the program by June 30, 2013 will have two full years, until June 30, 2015, to complete their submissions applying the 1996 look-back period.

Even if holders miss the deadline to enter the program by the end of this month, they can still enter the program but on slightly less favorable terms. Holders who enter the VDA program after June 30, 2013, but before June 30, 2014, will be able to apply a 1993 look-back-period if the submission is completed within one year, by June 30, 2015.

Unless they have already received a notice of examination, are currently participating in the Department of Finance VDA program, or have already completed a Department of Finance VDA prior to June 30, 2012, holders are generally eligible to enter the new VDA program.

In addition, in the new VDA program managed by the Secretary of State, holders may seek broad releases of liability across multiple legal entities, years, and property types, or they may tailor their submissions for specific legal entities, years, and property types. Thus, holders who may have already participated in a Delaware Department of Finance VDA may achieve compliance under the more favorable terms of the new program for recently acquired entities as well as entities, report years, or property types that may have been omitted from the prior VDA submission.

The Delaware Department of State has aggressively marketed the new VDA program to Delaware corporations. This has included multiple direct contacts to the largest Delaware corporations eligible to participate. If a holder has received one of these notices from the Delaware Secretary of State and declines to participate in the new VDA program, it is highly possible that the Department of Finance will target that holder for audit during the next few years.

As such, holders, if they have not done so already, should take steps, consulting with experienced unclaimed property advocates and legal counsel, during the next two weeks to determine their eligibility to participate in the new VDA program and potential cost savings in doing so. If the holder is eligible and has financial incentive to participate, the holder should file the Form VDA-1 to join the program by June 30, 2013 on the most favorable terms for holders.

OTHER RESOURCES
2013 UPPO Holders Seminar - See the Agenda Delaware VDA session



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:  Compliance  Due Diligence  education  UP Laws  VDA 

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Preliminary GAO Report: DMF Matching Not An Exact Science

Posted By Guest Author - Marcella Easly, Senior Compliance Officer, Unclaimed Property Consulting & Reporting, Sunday, June 16, 2013
Updated: Friday, June 14, 2013
Life insurance companies in eight states are working diligently to comply with new laws requiring beneficiary identification using the Social Security Administration’s Death Master File (DMF). But a new report from the General Accounting Office (GAO) exposes flaws in this new approach due to the shortcomings of the DMF as a resource.

The GAO report raises concerns about the accuracy and completeness of the DMF, and questions whether the Social Security Administration’s (SSA) procedures for verifying death reports may allow for erroneous information in the DMF, making it more difficult for insurance companies to comply with state laws.

The state DMF comparison requirement laws are based on a model law created in 2011 by the National Conference of Insurance Legislators (NCOIL) that mandates the use of the DMF as a cross-reference against an insurer’s list of in-force life insurance policies and retained asset accounts. According to the model law, once decedents have been identified and confirmed, insurers must make a good-faith effort to locate any beneficiaries, while providing the necessary claim forms and instructions.

However, the GAO report highlights several discrepancies within DMF records that may prove problematic for insurance companies trying to locate beneficiaries:

  • The SSA does not verify deaths for individuals who are not receiving Social Security benefits.
  • The partial DMF available to the public omits roughly ten percent of deaths; 87 million names for the partial DMF versus 98 million names for the full DMF, and the gap continues to widen. Relying on the DMF, federal agencies made an estimated $108 billion in improper payments in 2012 alone.
  • The SSA does not collect data on the number of deaths reported from credible sources, such as states using the Electronic Death Registration System (EDRS), versus less credible sources like funeral directors and family members. Only 35 states report deaths using the EDRS.
  • The SSA does not guarantee the accuracy of the DMF, which may result in insurance companies spending time and money to identify individuals who are not entitled to benefits.

As more states consider similar "DMF matching” laws, further study by the GAO (which is due to issue a full report on DMF accuracy later in 2013) may help state lawmakers get a more complete picture of the issue.

UPPO members can follow this topic by subscribing to weekly govWATCH legislative updates and participating in ongoing educational opportunities, such as the ongoing Members as Mentors webinar series taking place every month.

UPPO members and non-members can also learn more DMF matching, plus dozens of other topics, at the annual UPPO Holders Seminar, August 14-15, 2013 in Chicago. Register today and receive an early-bird discount.

OTHER RESOURCES
Social Security Administration’s Death Master File (DMF)


Tags:  Advocacy  Compliance  Due Diligence  Reporting  UP Laws 

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Objections to CA A.B. 1275

Posted By Guest Author - Ethan D. Millar, Partner, Alston and Bird, Wednesday, June 12, 2013

California A.B. 1275, which passed the Assembly on May 9, 2013 and which was heard by the Senate Judiciary Committee today (June 11, 2012), proposes to amend Section 1540 of the California Code of Civil Procedure to eliminate claims by persons with an "interest in” unclaimed property and to limit such claims to a person who was the legal owner of the property immediately prior to its escheat (with some exceptions for heirs, guardians, etc.).

We understand that this bill was primarily intended to eliminate the ability of creditors of the property owners from claiming such property, in response to the California Court of Appeal’s recent decision in Weingarten Realty Investors v. Chiang, 212 Cal.App.4th 163 (2012). However, the bill goes much further, by restricting property owners from assigning their rights in property that has been escheated (regardless of whether the property owner is aware of such escheatment).

UPPO has sent a letter to the Chair of the Senate Judiciary Committee (as well as the State Controller, who is pushing this legislation) objecting to A.B. 1275 on the basis that it is contrary to the primary purpose of state unclaimed property laws (which are designed to return missing property to the rightful owner, and not to interfere with the owner’s rights) as well as other laws (such as the UCC) that were intended to facilitate these sorts of assignments, which are common in business transactions. UPPO also made several other comments to this proposed legislation, including that A.B. 1275 would result in greater non-uniformity by amending a standard provision in the Uniform Unclaimed Property Acts that has been adopted by most states.


 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:  Advocacy  Compliance  Policy  UP Laws 

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Ontario Seeks More Feedback on Proposed Unclaimed Property Law

Posted By Karen Anderson, Senior Vice President, Unclaimed Property Recovery and Reporting, LLC, Sunday, June 9, 2013

In announcing budget objectives for the 2012 Ontario Budget, provincial officials indicated the Ontario government would establish a program to reunite owners with unclaimed intangible property, and for the government of Ontario to hold such property for the benefit of Ontarians unless and until the property is claimed. To this end, the Ontario Ministry of the Attorney General asked for written comments last fall on the proposed "Unclaimed Intangible Property Program.” The Ministry provided a "consultation” document including background information and questions the Ministry requested be addressed and submitted by responders no later than October 19, 2012.

Recently, the Ontario Ministry notified stakeholders that they would seek additional feedback during a series of round table meetings in Toronto, beginning with an industry specific "retail” round table on Monday, June 10. Four other meetings have been scheduled:

  1. Municipal – June 11
  2. Insurance – June 14
  3. Financial Services – (Other than Insurance) – June 17
  4. Others (Legal, Not-for-Profit, etc.) – June 18

In addition, the Ministry has indicated that it also will accept written comment submissions at this time.

The Ontario Government is using the "Unclaimed Intangible Property Act” (CUUPA) as the basis for discussion and for their potential law. This "model” law was created by the Uniform Law Commission of Canada and has some provisions, which are similar to those in state unclaimed property laws. The CUUPA, like unclaimed property laws in the United States, has defined dormancy periods for typical property types (five years for most, three years for others such as gift certificates, one year for wages) and due diligence, reporting and remitting requirements. Under the CUUPA, the reporting deadline is in the Spring (around April 30th), the due diligence minimum is "less than $100,” and the due diligence notice must be delivered at least three months but not more than six months prior to meeting the reporting deadline. It is recognized in the language of the CUUPA and in the drafters’ comments that the jurisdictional basis for the provincial laws will differ from the state laws, which derive jurisdiction from the U.S. Supreme Court decision Texas v. New Jersey.

UPPO is in contact with the appropriate officials in the Ontario Ministry of the Attorney General. Through the Government Relations and Advocacy Committee (GRAC), UPPO will not only monitor the Ministry’s progress but also will provide Ontario officials with comments regarding the development of the proposed law. UPPO members who want more information about the round table meetings and/or would like to register to attend them should contact the Ministry’s John Lee at john.a.lee@ontario.ca or 416-326-5114, or Rosemary Logan at rosemary.logan2@ontario.ca or 416-326-2515.

OTHER RESOURCES
U.S. Uniform Unclaimed Property Act
UPPO govWATCH - Legislative Monitoring


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:  Advocacy  Due Diligence  education  Members  UP Laws 

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