Advocacy Update

Changes to the Uniform Disposition of Unclaimed Property Act

Matt Coniglio Advocacy Leave a Comment

Changes to the Uniform Disposition of Unclaimed Property Act

On May 9, 2017 the Tennessee General Assembly passed HB 0420.  This bill revises the present law Uniform Disposition of Unclaimed Property Act and renames the Act to be the “Uniform Unclaimed Property Act.”  The bill was signed by the Governor on May 25, 2017 and became law on July 1, 2017.  Some present law previsions are retained and reorganized.  Under present law, the default dormancy period for property not otherwise specifically addressed is five years.  Consistent with the uniform act, this bill decreases the default dormancy period from five years to three years.  The two-step notification requirement regarding dormant accounts remains in effect.  The summary below will focus on some of the highlights of the bill.  To read the entire bill language, follow this link http://www.capitol.tn.gov/Bills/110/Bill/HB0420.pdf

BILL SUMMARY

The revisions to present law are based on the recommendation of the uniform law commission and its model, uniform act, but not all provisions of the model act are included in this bill. For example, this bill continues the present law exemption of gift cards from unclaimed property, which are included in the uniform act. Also, this bill retains the present law “business to business” exemption to unclaimed property, which is not a part of the uniform act. This bill establishes the presumed abandoned/dormancy period for various properties, in effort to take into account changing technologies and accounts, such as health savings accounts and stored-value cards.

Under present law, the default dormancy period for property not otherwise specifically addressed is five years. Consistent with the uniform act, this bill decreases the default dormancy period from five to three years. This bill also specifically addresses property held in retirement, health savings, and custodial accounts; such property is not covered under present law.

Under the present unclaimed property laws, unclaimed insurance funds are deemed abandoned five years after they are due. Also under present law, the Unclaimed Life Insurance Benefits Act requires insurers to perform a comparison of in-force policies, annuities, and account owners against a death master file, on a semi-annual basis, to identify potential death master file matches. This bill revises the general unclaimed property provisions to specify a company will be deemed to have knowledge of the death of an insured, which specifically includes a search of the death master file. This bill incorporates a specific reference to the requirements for the death master file comparison required by the Unclaimed Life Insurance Benefits Act under present law.

Under present law, if the person holding property presumed abandoned is a successor to other persons who previously held the property for the owner, or if the holder had a change of name while holding the property, that person must file with the report all prior known names and addresses of each holder of the property. The report must be filed before May 1 of each year. This bill changes the reporting date to be November 1, which is consistent with the uniform act.

Under present law, the treasurer must sell property of a type customarily sold in a recognized market, or a type that is the subject of widely distributed price quotations, within 12 months following the date the property was advertised. This bill rewrites this provision to instead wait three years prior to selling a security. Also, under this bill if the treasurer sells the security within six years of its delivery to the treasurer, an apparent owner that makes a valid claim of ownership before the six-year period expires will be entitled to receive a replacement of the security or its market value plus interest. These provisions are consistent with the uniform act.

Generally under present law, a person claiming an interest in any property delivered to the state under the Act may file a claim thereto or to the proceeds from the sale thereof. If the claim is allowed, the treasurer will make payment. This bill authorizes the treasurer to waive the requirement to file a claim and pay or deliver property directly to a person if:

(1) If the person receiving the property or payment is shown to be the same person as the apparent owner included in a report submitted to the treasurer by a holder of property presumed abandoned; or
(2) The treasurer reasonably believes the person is entitled to receive the property or payment.

Both present law and this bill authorize the treasurer to examine the records of any person to determine whether the person has complied with the Act. This bill adds a requirement for the treasurer to prescribe, by rule, procedures and standards for such an examination. This bill establishes other specific requirements for examination. This bill also establishes provisions for an informal conference in situations where an examination results in a determination that a putative holder has failed or refused to pay or deliver reportable property to the treasurer. This bill sets out in detail the procedures to be followed in an informal conference and provides for judicial review of the treasurer’s decision.

This bill authorizes the treasurer to take custody of property that is presumed abandoned, whether located in this state, another state, or in a foreign country in certain situations.

ON MAY 9, 2017, THE HOUSE ADOPTED AMENDMENT #4 AND PASSED HOUSE BILL 420, AS AMENDED.

AMENDMENT #4 revises various provisions of this bill, including the following:

(1) Includes as “property” an amount that has become due and payable by an insurance company in accordance with the terms of the applicable contract or as otherwise determined by the Act, and redefines “insurance company”;
(2) Revises this bill’s provisions regarding abandoned property. Under this bill, property, whose owner is known to the holder to have died and left no one to take the property by will and no one to take the property by intestate succession, is presumed abandoned without regard to any activity or inactivity within specified abandonment periods. Excluded from this provision is property held in a pension account or retirement account that qualifies for tax deferral under federal income tax laws; this amendment removes this exclusion;
(3) Adds as an indication of an apparent owner’s interest in property the fact that the apparent owner has another property with the holder to which the provisions governing payroll cards and demand, savings, and time deposit apply, for which the name and address on file with the holder for the apparent owner is the same, and for which the apparent owner has communicated in writing with the holder; or otherwise indicated an interest and if the holder communicates in writing with the apparent owner with regard to the property that would otherwise be abandoned at the address to which communications regarding the other property regularly are sent;
(4) Revises the provisions regarding a death master file match to specify that a match occurs if the criteria for a match are satisfied as provided by the Unclaimed Life Insurance Benefits Act. This amendment also deletes the requirement that the insurance company make a good faith effort using other available records and information to validate the death and instead provides that in the event a death master file match occurs, the insurance company that has a potential obligation must comply with applicable provisions of the Unclaimed Life Insurance Benefits Act;
(5) Revises certain reporting deadlines;
(6) Revises the provisions regarding the selling of a security to require the treasurer to sell or liquidate a security no sooner than eight months but no later than one year after receiving the security and giving the apparent owner notice.

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