Joseph Pollock, Freda Pepper
The Fall 2023
Legislative changes
There is always legislative activity related to unclaimed property. Legislative changes are perhaps one of the most impactful. For example, a new filing deadline is certainly disruptive to a reporting cycle. Recently, several states adopted a form of the Revised Uniform Unclaimed Property Act of 2016 and have changed insurance filing deadlines from October to April. Last year, the state of Washington changed the filing deadline for all insurance companies from the fall season to spring season. However, the state then published a regulation requiring non-life insurance companies to remain at the fall reporting deadline. With the change, Washington also removed its early mailing requirements.
Additionally, Indiana law changed, moving the reporting deadline for all insurance companies to the spring. However, a regulation was then published moving the deadline for non-life insurance companies back to the fall reporting deadline. Currently, Indiana's statutory law is in conflict with its regulations in terms of reporting deadlines for non-life insurance companies. The state, however, has made it clear that it expects non-life insurance companies to report in the fall.
Because of these frequent changes, it is important for holders to track the changes and to ensure that their policies and procedures comply with the most current laws.
Changes in administrative guidance
States often make changes to their websites and handbooks. Usually, the changes occur several months in advance of a filing deadline. However, some states do publish last-minute changes. As a result, it is recommended that holders review the state handbooks for changes no later than 45 days prior to a deadline. Because it is very rare that states highlight changes, websites and handbooks must be reviewed closely.
The type of changes often seen on websites and handbooks involve payment and delivery instructions. Custodian, bank accounts, payment methods and mailing addresses can change. Holders not up to date on these changes run the risk of incorrectly filing and, thus, can miss the state deadline and be subject to interest and penalties.
It's also important to understand which states require account setup prior to submitting a file. As you can imagine, states become more inundated with requests as the filing deadline approaches. Obtain credentials and verify access to a state's website more than 30 days prior to a deadline.
Another area to pay close attention to is the state's guidance when a filing date falls on a weekend or holiday. There are several states that address this scenario on their state website, in their handbook or unclaimed property laws. If you are unsure, reach out directly to a state to clarify when to file.
More than October
Holders must be vigilant about filing deadlines, as not all are in October. The fall filing season starts in September with New York's deadline for life insurance and insurance holders on September 10. Apart from filings, New York also mandates life insurance companies to advertise in a minimum of one newspaper. This must be fulfilled before May 1. Minnesota mandates life insurance holders to file by September 30. Following the October filings, December presents deadlines in two states: California's remittance for life insurance and Delaware's requirement for life insurance and insurance holders to file by December 20.
Payment delivery
In addition to filing the report before the deadline, delivery of cash or securities to the state is equally important. For a report to be considered an on-time filing, both the report and payment must be delivered by the time proscribed by the state. Failure to do so can result in interest and penalties.
Many states require electronic payment at the time of filing. Payment instructions must be communicated internally to your finance team to ensure you are prepared to remit cash properties on time. With respect to securities, it is important to verify delivery instructions (broker account, pre-submission, worthless securities, etc.). Often, you can find these details on a state's website or in the state's handbook.
California
Last year, California eliminated the requirement to send in a report on CD-ROM and began using electronic report delivery via its website. California is the only state that requires holders to submit two
- Notice & remittance reports. Keep in mind that California's schedule is based on holder type. Life insurance holders file their notice in April and the remittance is filed in December. All other holders file notice reports in October and remittance in June.
- Cash properties. It is important to remember that cash properties are delivered with the remittance report, not the notice filing.
- Due Diligence Mailings. California requires letters to be mailed six to 12 months before the property becomes reportable to the state.
Change cannot be predicted and is often out of our control. Instead, we need to focus on the events that we can control, as that is our ability to prepare for change. We can prepare for events that have changed in the past, then focus on those items.
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