Unclaimed Property Used by States as "General Revenue"

Unclaimed Property Used by States as "General Revenue"

Mr. Lyman writes: The blog Life, Liberty and the Pursuit of recently featured a posting captioned When Is Forever Not Actually Forever? The blogger reacted negatively to an unclaimed property article that had appeared in the Minneapolis Star-Tribune reporting, in part, that States have three years to locate owners or beneficiaries [and] after that, the money goes to the general fund, which pays for the bulk of state programs and services. The blogger concluded that state unclaimed property programs aren’t about protecting consumers, and instead their purpose is to allow politicians, who are nothing but bandits and thieves hiding under the guise of the law to get free money.
 
As it turns out, the Star-Tribune didn’t quite understand the operation of unclaimed property statutes-- that it is the holders of the property (and not the states) that have a defined period of time (the abandonment period) to search for the assets’ owner. The blogger might have had a better day and brighter outlook had the Star-Tribune been clearer. But what about the point that the unclaimed funds were being moved into the states general fund (in this case, Minnesota’s) and the idea that claimants really don’t have forever to reclaim their property? Is in fact something sinister afoot, and was the bloggers cynicism concerning unclaimed programs in fact justified?
 
Minnesota does in fact deposit all unclaimed property cash receipts directly into the state’s general fund; for the most part, the unclaimed property collections take on the character of general revenue and are utilized to cover state expenditures and other obligations (including, but by no means limited to, unclaimed property claims). The critical fact to remember is that the liability to pay reappearing owners does not vanish through this procedure. There is a legal liability established by the state, which recognizes the concept that all of the unclaimed property collections represent the assets of the individual owners, and not the state. However, there is also a separate accounting liability, which recognizes that portion of the legal liability that will in fact likely be paid to reappearing owners.