Recent developments have brought the Social Security Administration’s (SSA) Death Master File (DMF) into the spotlight. Traditionally, the DMF has been a critical tool for financial institutions, insurers, and government agencies to verify deaths and prevent fraud. However, a new policy shift has introduced significant complexities that could impact unclaimed property obligations.
A Controversial Policy Shift
In a move aimed at encouraging self-deportation, the Trump administration has reportedly added over 6,300 living immigrants to the DMF, effectively classifying them as deceased. This action, targeting individuals who lost legal status after entering the U.S. under temporary programs, renders their Social Security numbers inactive, cutting off access to employment, banking, and federal benefits. Wikipedia+4AP News+4People.com+4People.com+2Reuters+2AP News+2
The SSA has internally renamed the DMF as the “Ineligible Master File,” reflecting its expanded use beyond tracking actual deaths. This reclassification raises concerns about the integrity of the DMF and its reliability as a reference for compliance purposes.
Implications for Unclaimed Property Obligations
Many unclaimed property laws rely on the DMF to determine dormancy triggers that establish the timing of the escheatment processes. The inclusion of living individuals in the DMF could lead to premature escheatment of assets, violating property rights and exposing holders to legal risks. Moreover, since 2018 eight states have added death as a dormancy trigger applicable to property types other than life insurance benefits and annuities, for which it was traditionally used since the insurance industry global resolutions reached around 2009.
Financial institutions and insurers must exercise caution when using the DMF for compliance decisions and make difficult decisions about validating the data contained in the DMF, whether or not the state unclaimed property laws provide a mechanism for such validation. Verifying deaths through additional sources and implementing robust due diligence processes are essential to avoid erroneous escheatments.
In an added complication, while currently positioned only as an “internal” name change, the change in name from the death master file to the ineligible master file may create compliance questions for holders in instances where state statutes explicitly refer to the DMF.
Moving Forward
This development underscores the need for a critical review of reliance on the DMF in unclaimed property compliance. Stakeholders should monitor policy changes and legal challenges related to the DMF’s use and the administrations inclusion of living individuals. Scripta will be closely monitoring the evolving landscape and ensure our subscribers receive guidance on compliance practices designed to protect holders and owners.
As the situation unfolds, collaboration and vigilance will be key in adapting to these unprecedented changes in the use of the Death Master File.