This Spring has been a busy time for unclaimed property legislation. Three bills that will affect major changes to the unclaimed property compliance requirements in their states have made quick progress in the past few weeks. Washington’s RUUPA bill has been enacted and will take effect January 1, 2023, meaning that property this Fall will still be reportable under the current law. West Virginia by contrast, enacted it’s unclaimed property modernization bill effective June 10, 2022. That means that the reduced dormancy periods, virtual currency provisions and elimination of the distinction between interest bearing and non-interest-bearing deposit accounts that are hallmarks of this bill will be in effect prior to the fall reporting cut-off date. Finally, Maryland’s daring House Bill 305 which provides RUUPA-like standards for the dormancy of securities, and applies the same standards to deposit accounts, has passed both houses of the legislature and is awaiting governor signature. Once signed, it will become effective October 1, 2022.
Scripta subscribers can access a full comparison of the current law to the new law through Scripta’s “View History” function within Keyword and Topic results, and through the “Impact” feature within Scripta’s Legislative Tracking. Email: info@scripta.llc for more information about becoming a subscriber.
Washington S 5531:
Enacted March 30, 2022 and Effective January 1, 2022; this bill implements the provisions of the Revised Uniform Unclaimed Property Act (“RUUPA”) in Washington. It does maintain some deviations from RUUPA, and some other features that are not consistent with Washington’s prior law. Key among these are the following:
- Payroll Cards are not included in the deposit account provision but are addressed separately. They are reportable one (1) year after the amount becomes payable.
- Gift Certificates are exempt from unclaimed property reporting requirements if they: (a) do not expire (with limited exception); and (b) can only be redeemed for goods, intangible services, or other items provided by the issuer, its affiliates or others involved in transactions functionally related to the issuer or its affiliates. Instruments that do not meet these requirements are Stored Value Cards, the net value of which is presumed abandoned three (3) years after the latest of (a) 12/31 of the year it is issued or funds deposited, (b) date of last owner contact, or (c) the owner’s verification or balance review.
- Deposit accounts are addressed under a corrected version of RUUPA’s language, identifying that maturity is only a factor in determining dormancy if it is applicable to the type of account in which the property is held, i.e., a time deposit.
- Eliminates linkage between accounts held by a financial institution.
- Tax-deferred retirement accounts use a living trigger of age 72 to align to the changes that the SECURE Act made to distribution of an Individual Retirement Account.
- Requires that securities remitted as unclaimed property be sold “as soon a practicable,” but does not provide for any mechanism to make the owner whole if the value of the securities increased subsequent to such a sale.
West Virginia H 4511:
Enacted March 28, 2022 and Effective June 10, 2022, this bill modernizes certain aspects of West Virginia’s unclaimed property law. Specifically, it includes the following key provisions:
- Defines virtual currency and provides that it is presumed abandoned three (3) years from the date of the owner’s last indication of interest. Additionally, it provides that holders are required to convert virtual currency to US dollars prior to remittance, and states that owner shall have no recourse against either holders or the state for any losses as a result of such conversion/liquidation.
- Eliminates the divergent dormancy periods applicable to interest-bearing and non-interest bearing demand, savings and time deposit accounts; and applies a 5-year dormancy period to all such accounts. In making this change WV has implemented the language included in the erroneous version of RUUPA that is identified as the “final” version on the Uniform Law Commission’s website. This version seems to require maturity prior to dormancy for all demand, savings and time deposit accounts; regardless of whether or not such accounts do in fact mature. As in other states where this language is employed, the industry consensus is to apply a date of last contact standard for accounts that by their nature do not mature.
- Dormancy periods are reduced for multiple property types: (a) Any property subject to the catchall provisions from 5 to 3 years; (b) Utility deposits and refunds from two (2) years to one (1) year; and (c) Certain debt of a business association from 5 to 3 years.
- Reimbursement for unpaid rent and storage costs related to safe deposit boxes is capped at $150 and shall not be paid to the holder until after the property is claimed from the state by the owner.
Maryland H 305:
Amended February 22, 2022 and April 6, 2022, this bill has passed both houses and became eligible for the governor’s signature on April 11, 2022. If signed, which is expected, it will become effective on October 1, 2022. This bill establishes a new status for securities and banking accounts wherein the holder is “deemed not to have a valid address.” This status is defined as the account having received returned mail. In a manner consistent with RUUPA where the holder does not routinely send mail to the owner, an email notice followed by first-class mail if no valid address exists, the email is returned, or no response is received is required after two (2) years of inactivity.
In the banking section, for demand, savings and matured time deposits (and for their credit union equivalencies) the dormancy trigger becomes the later of: (a) The date the holder is deemed not to have a valid address (i.e. RPO), and (b) The date of last contact. Under current law, dormancy is only based on the date of last owner-initiated contact.
With respect to securities and securities related cash such as dividends and interest, the trigger also becomes the later of: (a) The date the holder is deemed not to have a valid address (i.e. RPO), and (b) The date of last contact. Under current law, dormancy is triggered by the failure to cash a distribution or otherwise contact the holder.
