Monday, August 25, 2008

How to Avoid Having Unclaimed Property

There are billions of dollars of unclaimed property. We've written about a number of ways you can find out if a state or the federal government is holding property for you. See Better than having unclaimed money, though, is making sure you get everything that's yours in the first instance. Here are some ways you can avoid having unclaimed money.

Cash or deposit all checks. This may be one of the most typical sources of unclaimed money. Small checks for dividends, rebates, credit card cashback awards, refunds and the like almost seem like an annoyance, and the rise of Internet banking doesn't make it easier to deal with them. But make sure you cash or deposit all of them. A brief look at the numbers will tell you that these little checks add up. Let's assume you get $50 a year, after taxes, of annoying little checks over the course of a 50-year adulthood (mid-20s to mid-70s). We'll also assume that you're thrifty and save this money, earning 6% a year return on it. At the end of the 50 years, you'll have about $14,500. Adjusted for inflation of 3% a year, you'll have about $3,165. That's enough for a nice Carribean or Alaskan cruise. You could play a lot of shuffleboard and pig out at buffets if you just deposit all your checks. If you're not careful about these little checks, it's easy to let $50 a year slip out of your hands. Just remember that, with a little more diligence, you could taken a cruise.

Claim all rebates, refunds and rewards. One reason manufacturers like to offer product rebates, instead of just lowering prices, is that many people don't claim them. They just can't be bothered with the paperwork, which is usually enough to be annoying. Then, the manufacturer gets the best of both worlds. The consumer is lured in by a rebate, believing that he or she is getting a deal. But the manufacturer makes a sale without having to actually lower the price. Claim all rebates, refunds, and cashback and other rewards. A nice cruise is at stake. If you don't, many of these claims may not show up on government lists as unclaimed property--because it's not yours unless you try to get it in the first instance.

Keep track of your assets and organize your financial records. This may seem obvious, but it gets harder as you progress through your career, prosper and begin to accumulate all kinds of assets that seemed like a good idea at the time you invested in them. But as stocks split, mutually owned insurance companies and savings and loans become stock corporations, banks change their names, married couples holding property jointly get divorced, and so on, keeping track of all assets becomes harder and harder. People are busy and paperwork is a hassle. Data in hard drives is lost as computers are replaced and downloadings are incomplete. But not keeping track of assets means you're losing them. Take the time and trouble to keep track of what is yours. Maintain your records, for a long time. If one of your assets somehow becomes unclaimed property, you may need an ancient account statement or stock certificate to prove that you are the true owner who was last heard from 15 or 20 years ago. If you lose an average of $50 a year over the course of your adulthood because of sloppiness and laziness, another Alaskan or Carribean cruise goes down the drain.

Update your address. Another common way people lose money and other property is to fail to update their banks, brokerage firms, mutual funds, 401(k) administrators, insurance companies and other financial firms with changes of their address. This should be a nobrainer, but some people . . . .

Respond to legitimate inquiries about your accounts. Sometimes, you might get an inquiry from a bank or other firm to verify that an account is yours. Make sure the inquiry is legitimate (never give out information over the phone or in response to an unsolicited e-mail). But respond to all legitimate inquiries. Otherwise the bank or other firm might turn your account over to a state agency as unclaimed property.

Leave jobs on an informed and fully compensated basis. Whenever you leave a job, make sure you find out the status and balance of any retirement accounts you have. Very important are 401(k) and employee stock option plan accounts--get account numbers and balances, and find out what options you have to keep them with the employer, transfer them and/or cash them out. If you're lucky, you might also have a traditional pension plan account. Find out if you're vested, when you might start collecting benefits, and what options you have. Collect all of the commissions, bonuses, awards and compensation you've earned. Cash out your accumulated vacation time and sick leave, if possible. Exercise your stock options if possible. Check into the situation with deferred compensation and restricted stock. For more information about things to think about when leaving a job, see

File tax returns--and deposit the refund check. Taxes are inevitable, but tax refunds aren't. You have to file a return in order to claim your refund. Amazingly, some people don't file returns even though they're entitled to refunds. Don't pay more than your fair share of taxes. File for your refund. Even more amazingly, some people don't deposit their refund checks. This violates the first rule of avoiding having your property be unclaimed. Deposit your tax refund checks. Better yet, have the refund electronically deposited into your bank account.

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