A local law firm sent us a law update describing a recent change to an Illinois unclaimed property law. They say that electronic and paper savings bonds “will be considered abandoned and convert to property of the State of Illinois if the bonds are five years after their extended maturity date.” Will our customers retain ownership of their savings bonds if five years have passed since a bond’s maturity date? Or are they required to turn over matured savings bonds to the state?

No, your customers are not required to turn over matured savings bonds in their possession to the state.

Illinois’ current unclaimed property law — the Uniform Disposition of Unclaimed Property Act — is scheduled to be repealed and replaced by the Illinois Revised Uniform Unclaimed Property Act on January 1, 2018. While the new law generally is a complete overhaul of the existing law, it does not alter the current law’s provisions on savings bonds.

Under both the current and new laws, the Illinois Treasurer has the authority to take ownership of matured savings bonds only if they are in its possession (for example, savings bonds that were turned over to the Treasurer because they were found in an abandoned safe deposit box). Moreover, the Treasurer takes ownership of these abandoned savings bonds only for purposes of redeeming them and holding the proceeds on behalf of the bonds’ owners, who can submit claims to the Treasurer for the bond proceeds the same as for any other unclaimed property. Matured savings bonds held by your customers are not required to be turned over to the state and may be redeemed by your customers at any time.

We are aware that others have been confused about this aspect of the law, and the Treasurer has published a fact sheet attempting to clarify these questions, which we link to below.

For resources related to our guidance, please see:

UDUPA, 765 ILCS 1025/8.1(c)(1) [repealed effective 1/1/18] (“As used in this subsection, ‘United States savings bond’ means property, tangible or intangible, in the form of a savings bond issued by the United States Treasury, whether in paper, electronic, or paperless form, along with all proceeds thereof in the possession of the State Treasurer.”)
Illinois RUUPA [effective 1/1/18], 765 ILCS 1026/15-213(a) (“As used in this Section, ‘United States savings bond’ means property, tangible or intangible, in the form of a savings bond issued by the United States Treasury, whether in paper, electronic, or paperless form, along with all proceeds thereof in the possession of the administrator.”)
UDUPA, 765 ILCS 1025/8.1(c)(3) [repealed effective 1/1/18] (“United States savings bonds that are presumed abandoned and unclaimed under paragraph (2) shall escheat to the State of Illinois and all property rights and legal title to and ownership of the United States savings bonds, or proceeds from the bonds, including all rights, powers, and privileges of survivorship of any owner, co-owner, or beneficiary, shall vest solely in the State . . . .”)
Illinois RUUPA [effective 1/1/18], 765 ILCS 1026/15-213(c) (“United States savings bonds that are presumed abandoned and unclaimed under subsection (b) shall escheat to the State of Illinois and all property rights and legal title to and ownership of the United States savings bonds, or proceeds from the bonds, including all rights, powers, and privileges of survivorship of any owner, co-owner, or beneficiary, shall vest solely in the State . . . .”)
Illinois State Treasurer Fact Sheet, U.S. Savings Bonds Unclaimed Property (“This legislation would only apply to physical bonds that are currently in possession of the Treasurer and would only cover matured bonds — bonds that are no longer earning interest — where inflation is diminishing the value of the bond proceeds to its owners. As with all unclaimed property, the State Treasurer would attempt to return the proceeds of these bonds to their original owners or their legal heirs. Any person making a claim for the U.S. savings bonds escheated to the state and providing sufficient proof of the validity of the claim would be paid in accordance with the state’s unclaimed property law, which is a much simpler process than the U.S. Treasury’s regulations.”)