If we have a customer whose last known domicile is in a state other than Illinois, should we report unclaimed to that state or to Illinois? Does the new Illinois law require us to look at the law of the owner’s last known domicile to determine the abandonment period, or can we continue to use the time periods set forth in Illinois statute and just transfer custody to the appropriate state once the property is considered abandoned under Illinois law?

As a practical matter, we believe that your bank may report abandoned property to Illinois, even if the apparent owner’s last-known address is in another state.

Technically, your bank should be reporting and remitting property to an outside state if your bank’s records show a last-known address outside of Illinois. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) provides that the Illinois Treasurer may take custody of property only if the last-known address of the apparent owner is in Illinois, in accordance with a U.S. Supreme Court decision holding that abandoned property generally should be reported to the state of the apparent owner’s last known address (if any).

However, the Illinois Treasurer’s office has informed us that Illinois exchanges unclaimed property with other states under informal reciprocity arrangements. Consequently, property holders may report out-of-state property to the Illinois Treasurer’s office, which will then forward that property on to the appropriate state. Importantly, once your bank has reported and remitted property to the Illinois Treasurer, your bank is “relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.”

Whether your bank remits unclaimed property to each state or remits everything to Illinois, our recommendation is to use the abandonment periods provided in Illinois law. The Illinois Treasurer’s office confirmed for us that the Illinois law’s presumed abandonment periods are equal to or shorter than other states’ presumed abandonment periods. Consequently, there is very little risk that your bank would submit an untimely report when applying the Illinois law’s presumed abandonment periods.

For resources related to our guidance, please see:

Illinois RUUPA, 765 ILCS 1026/15-302 (“The administrator may take custody of property that is presumed abandoned, whether located in this State, another state, or a foreign country if: (1) the last-known address of the apparent owner in the records of the holder is in this State; or (2) the records of the holder do not reflect the identity or last-known address of the apparent owner, but the administrator has determined that the last-known address of the apparent owner is in this State.”)

Illinois RUUPA, 765 ILCS 1026/15-304 (“Except as in subsection (b) or Section 15-302 or 15-303, the administrator may take custody of property presumed abandoned, whether located in this State, another State, or a foreign country, if the holder is domiciled in this State . . . and (1) another state or foreign country is not entitled to the property . . . .”)

Uniform Law Commission, Revised Uniform Unclaimed Property Act, Section 301, Official Comment (printed page 43) (“This Article closely follows the language of Texas v. New Jersey, in which the court reasoned that unclaimed property is an asset of the creditor and should generally be paid to the creditor state, i.e., the state of residence of the apparent owner. Consistent with that reasoning it held that unclaimed intangible property is subject to custody as unclaimed property first by the state of the owner’s last known address. See Section 302.”)

Illinois RUUPA, 765 ILCS 1026/15-604(a) (“On payment or delivery of property to the administrator under this Act, the administrator as agent for the State assumes custody and responsibility for safekeeping the property. A holder that pays or delivers property to the administrator in good faith and substantially complies with Sections 15-501 and 15-502 [required notice to the property’s apparent owner] is relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.”)

Illinois RUUPA, 765 ILCS 1026/15-604(b) (“If legal proceedings are instituted by any other state or states in any state or federal court with respect to unclaimed funds or abandoned property previously paid or delivered to the administrator, the holder shall give written notification to the administrator and the Attorney General of this State of such proceedings within 10 days after service of process . . . .”)