State unclaimed-property programs hold almost $42 billion in assets, according to the National Association of Unclaimed Property Administrators. The U.S. government has more funds held by different agencies. Searching for unclaimed property is a challenge: there's no single database so finding the money may take multiple searches. At the end of it all, sometimes there's a tax bill too.
Collecting unclaimed funds doesn't change the tax laws. If you find, for example, you have a left-over paycheck from an old job or unclaimed mineral royalty payments from a decade ago, that money is still taxable income. Life insurance proceeds, which turn up in lots of unclaimed-property databases, aren't usually taxable. If you discover you're the beneficiary of a policy you didn't know about, you can probably claim the money without worrying about taxes.
Lost-asset databases are public records. You can search any of them without paying a fee, and you don't have to pay the government to get your money out. You can also pay a company to search for you -- or sometimes a company may contact you with news of unclaimed funds and offer to hook you up. Some searchers are legitimate, but there are plenty of scam artists out there. Be very careful of who you hire, particularly if the firm demands an up-front fee rather than a percentage of what it finds.
Although some states have had unclaimed-property rules in place for decades, a lot of businesses, even in the 21st century, don't know about them. If a customer's account goes inactive or an employee never picks up her paychecks, a business may assume it's "finders keepers" and keep the money for itself. This doesn't turn the money into taxable business income. Instead, the company may end up paying fines if the government finds out and prosecutes.
If you're doing well, it's easy to lose track of an asset here or there, like the 401(k) from three jobs back. It's even easier if, say, your parents pass on and you have to piece together the picture of their assets. To minimize lost funds, keep lists and records for all your accounts, insurance policies and other investments, even ones you're not currently putting money into. Let your spouse and kids know where to find the records just in case they need to someday.
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