Topic: Unclaimed Property
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One of our branches offers self-service storage boxes located in the branch lobby. We do not keep duplicate keys for the boxes, nor do we monitor or record who accesses the boxes, and we do not require ID before customers access their boxes. The lease agreement for the boxes clearly states that they are not safe deposit boxes and do not have the same protections as safe deposit boxes. A recent webinar stated that these types of boxes are very risky but did not provide further details. We have identified that the boxes may pose an insurance risk, and we plan to discuss this with our insurance provider. Are there any other risks we may be overlooking with respect to these boxes? Would a court treat these boxes as safe deposit boxes?
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In our view, self-service storage boxes may expose your bank to the risk of losses due to unauthorized entry of the boxes and theft of the contents. Additionally, we believe that your bank’s risk exposure depends on the language of your rental agreement and other factors (such as insurance coverage) — not whether the boxes…
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Regarding unclaimed property, what is the dormancy rule for automatically renewing certificates of deposit (CDs)? Are they considered dormant if there is no contact for three years after the initial renewal? If a customer receives interest checks that are being cashed, is that considered “contact”? Also, would individual retirement accounts (IRAs) be considered dormant three years after the first required minimum distribution if there has been no contact?
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Unclaimed Certificates of Deposit Absent any qualifying activity for the account, an automatically renewing time CD must be treated as unclaimed property once three years have passed from the first renewal date. The Illinois RUUPA does provide that automatically renewable accounts will not be considered unclaimed property if “3 years after its initial date of…
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Is there a deadline for sending out due diligence letters about unclaimed property to customers? Under the previous law it was sixty days before November 1, but I can’t find that in the new law.
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Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), property holders must send out due diligence letters at least sixty days, and up to one year, before reporting the property as unclaimed on November 1. There are several exceptions to this requirement, such as when the property is valued at less than $50, or…
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Under the new unclaimed property law, when determining which individual retirement accounts (IRAs) we have to report as unclaimed property, do we have to do anything beyond checking that IRA customers over the age of 70½ have distributions to confirm that the accounts are active? Do we have to look into IRAs held by customers under that age?
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Yes, we recommend at least widening your search to also include inherited IRAs for which the mandatory distribution date has begun. The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) requires tax-deferred retirement accounts, including IRAs, to be reported and remitted as unclaimed property on the later of: Three years after the date that a…
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Do we have to send letters to customers with unclaimed property valued at less than $100, or is the threshold $50?
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Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), the threshold for sending due diligence notices to apparent owners of unclaimed property is $50, not $100. For resources related to our guidance, please see: Illinois RUUPA, 765 ILCS 1026/15-501(a) (“Subject to subsections (b) and (c), the holder of property presumed abandoned shall send to…
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Do we still need to check our list of deceased customers for unclaimed property? Do we still need to check for UTMA accounts for which the beneficiaries have reached the age of 21, plus the 3-year abandonment period, to ensure that the custodians were removed?
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Yes, we believe that both processes described in your question continue to be necessary under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). When a customer dies, their accounts generally will be presumed abandoned two years after their last indication of interest in the accounts (unless the applicable abandonment period is shorter than two…
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We have a customer (“M”) who died in 2017 at the age of 53. M had an IRA that named one primary beneficiary and no contingent beneficiaries. The primary beneficiary died prior to M’s death and no other beneficiaries were named. The IRA documentation provides that if M dies with no beneficiaries, the IRA funds shall be paid to M’s estate. M’s relative (“J”) informed the bank that they were going to be the executor of M’s estate, but J died before this occurred. As far as we know, an estate has not been opened for M. The executor of J’s estate provided us with their letters of office and informed us that M’s IRA funds should be paid to J’s estate. Can you confirm that absent additional documentation, our bank should not pay M’s IRA funds to J’s estate? Also, how should we handle M’s IRA funds, since their estate has not been opened?
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Based on these facts, we do not believe the executor of J’s estate is entitled to receive the funds in M’s IRA account without additional documentation establishing that J’s estate is the rightful beneficiary of M’s estate. A designated beneficiary of an IRA must be designated the IRA’s beneficiary as of the date of the…
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Under the new Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA)’s new administrative rules, what is the minimum value below which unclaimed property does not have to be reported to the state? Is a bank entitled to absorb these funds?
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Neither the Illinois RUUPA nor its new administrative rules provide a de minimis threshold for reporting or remitting unclaimed property to the Illinois Treasurer. Consequently, a holder of unclaimed property is not entitled to retain any of it, no matter how small the amount. Although your bank does not need to send notice to an…
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Have any unclaimed property rules changed since the new law took effect on January 1, 2018?
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Yes, new administrative rules have been issued since the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) became effective on January 1, 2018. After the Illinois RUUPA became effective, the Illinois Treasurer issued administrative rules that took effect on March 25, 2019. The administrative rules clarify matters such as reporting safe deposit box property, the…
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Do we have to treat accounts established under a court order as inactive when the court order prohibits withdrawals until the beneficiary reaches the age of majority? It seems counterproductive to send out inactive notices for these accounts when no activity can be conducted.
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No, we do not believe that your bank should treat these accounts as inactive. They will not be considered unclaimed property until three years after the account beneficiaries reach the age of majority, assuming the court orders establishing the accounts were entered pursuant to authority under either the Illinois Probate Act of 1975 or the…