Topic: Unclaimed Property
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We have a customer with an IRA at our bank. The customer is not yet 65 years old and has not made any deposits since opening the IRA four years ago. The customer also holds certificates of deposit (CDs) at our bank sharing the same mailing address as the IRA. Because the new Illinois unclaimed property law would treat the IRA as active, can we also treat the CDs as active?
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No, we do not recommend treating the CDs as active unless the customer has communicated with the bank or made some other indication of interest in one of the CDs or the IRA. We agree that the IRA should not be treated as abandoned under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), which…
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Under the new Illinois unclaimed property law, if we mail monthly statements for checking accounts that also display certificate of deposit (CD) balances, is that an “indication of interest”?
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No, mailing a statement to a customer does not constitute an indication of interest by that customer. Under the Illinois RUUPA, generally an “indication of interest” requires some activity by the customer, such as increasing or decreasing the account balance or communicating with your bank. Also, in this scenario, both accounts appear on the same…
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Is there anything in the new Illinois unclaimed property law that would prevent us from changing our dormancy fees? We currently charge a semiannual fee and will be switching to a monthly fee, with advance notice provided on our periodic account statements.
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No, we do not believe that the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) would prevent your bank from changing its dormancy fees as you described — provided that your bank’s customers have contractually agreed to the new fee. The Illinois RUUPA requires that dormancy fees be charged pursuant to a “valid contract [that]…
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We have a tax-deferred retirement account owned by an individual who has not yet reached the age of 70 1/2 years. It’s a simple CD IRA with a very low balance. We have three years of communications that have been returned undeliverable. We are not aware of the customer’s death. Do we need to report and remit this account as unclaimed property? How should we fill out the IRA distribution form? Should we withhold 10% for federal income taxes to cover the early withdrawal penalty?
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We do not believe that you should report a tax-deferred retirement account as unclaimed property before the owner has died or reached the age of 70½. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) requires tax-deferred retirement accounts to be reported and remitted to the Treasurer on the later of: Three years after the…
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Under the Truth in Savings Act, does our bank have to notify an account holder when an account becomes classified as “dormant”? We disclose dormancy fees in our account opening disclosures, and we send out a pre-dormancy notice thirty days before the account is classified as “dormant.”
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No, we do not believe that your bank must provide notice to a customer when their account becomes classified as “dormant,” provided that your account agreement and disclosures do not impose this requirement. However, under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), your bank must communicate with customers about accounts that are presumed…
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The new Illinois unclaimed property law imports similar language from the previous law regarding linked accounts that share the same the mailing address in our books and records. Would that language apply to money orders or cashier’s checks?
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No, we do not believe that the “linked account” language in the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) would apply to money orders and other instruments on which a financial institution is directly liable. That language applies only to “accounts.” While the term “accounts” is not defined in the law, we do not…
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As a hypothetical, say we have two accounts sharing the same mailing address — Account 1 and Account 2. Account 1 has just one owner, individual A. Account 2 has two owners, individuals A and B. Under the new Illinois unclaimed property law, if Account 2 is active due to individual B’s activities, does that count as activity on Account 1, even though individual B has no ownership interest in that account? Also, what if individual B has an active deposit account and is the beneficiary of a revocable trust account (in other words, he is not the legal owner of the trust account) that is using the same social security number and mailing address as the individual deposit account?
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As to your first question, we do not believe that activities by a non-owner of Account 1 could cause that account to be considered active. As to your second question, activities by the beneficiary of the trust account would cause both the trust account and the beneficiary’s individual account to be considered active. The new…
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Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), is it an indication of interest when interest is automatically deposited into a certificate of deposit (CD) account?
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No. Under the Illinois RUUPA, an automatic deposit of interest is not considered an indication of interest. Unlike cashing or depositing an interest check (which is considered an indication of interest), the automatic posting of interest does not require any activity by the customer. Consequently, for CD accounts with automatic interest deposits, your bank must…
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We understand that the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) requires our notice to an accountholder to include the “value of the property” that is subject to remittance. Under this language, should we include the specific account balance in our customer notices? We did not include that detail in the past.
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Yes, the Illinois RUUPA requires property holders to notify their customers of the “value of the property that is the subject of the notice,” and we interpret this as requiring your notices to include the balance of the account identified in the notice. For resources related to our guidance, please see: Illinois RUUPA, 765 ILCS…