Hi,
The sister of a friend lives in California and has troubles with her bank. She is very old, above 90, widowed, has no children and all her relatives live in Europe.
The problem is that she has a larger amount of money at her bank. Now she wants to close the savings account and withdraw the money. But the bank claims that she can’t draw the sum out because there is a law that the U.S. state can confiscate and disown money if it has been on an account without any flow of money for a longer period.
It is difficult for us to help her because we all live in Europe and she is very senile. It is, for example, hard to convince her to go to a lawyer. Can anyone please tell me if there indeed is such a law? Or is the bank trying to deceive her?
(I hope I described my concern in an understandable form, since my native language is German.)
States have devised schemes in order to steal peoples money by declaring certain bank accounts,investments and even safe deposit boxes "inactive" or "dormant" after a certain period of time.
What Happens to Inactive Bank Accounts? | MyBankTracker
States grab unclaimed property
Why you should keep in touch with your money
SEC.gov | Escheatment Process
he Escheatment Process
All states require financial institutions, including brokerage firms, to report when personal property has been abandoned or unclaimed after a period of time specified by state law — often five years. Before a brokerage account can be considered abandoned or unclaimed, the firm must make a diligent effort to try to locate the account owner. If the firm is unable to do so, and the account has remained inactive for the period of time specified by state law, the firm must report the account to the state where the account is held. The state then claims the account through a process called "escheatment," whereby the state becomes the owner of the account.
As part of the escheatment process, the state will hold the account as a bookkeeping entry, against which the former account owner may make a claim. States tend to sell the securities in escheated accounts and treat the proceeds as state funds. When a former account owner makes a valid request, however, the states will normally provide the former owner with cash equaling the value of the account at the time of escheatment. This amount of cash does not include any dividends or interest covering the time after escheatment.
Not-So-Safe-Deposit Boxes: States Seize Citizens''' Property to Balance Their Budgets
- ABC News
California law used to say property was unclaimed if the rightful owner had had no contact with the business for 15 years. But during various state budget crises, the waiting period was reduced to seven years, and then five, and then three. Legislators even tried for one year. Why? Because the state wanted to use that free money.
"That's absolutely correct," said California State Controller John Chiang, who inherited the situation when he came into office. "What we've done here over the last two decades has been dead wrong. We've kept the property and not provided owners with the opportunities -- the best opportunities -- to get their property back."
Chiang now faces the daunting task of returning $5.1 billion worth of unclaimed property to people. Some states keep their unclaimed property in a special trust fund and only tap into the interest they earn on it. But California dumps the money into the general fund -- and spends it.
"It's supposed to be segregated and protected," Palmer said. "California has taken all of that $5.1 billion and has used it as a massive loan."
California became so addicted to spending people's money, that, for years, it simply stopped sending notices to the rightful owners. ABC News obtained a 1996 internal memo in which the lawyer for the Bureau of Unclaimed Property argued against expanding programs to notify rightful owners. He wrote, "It could well result in additional claims of monies that would otherwise flow into the general fund."
Seizing More Than Safe-Deposit Boxes
It's not just safe-deposit boxes. A British man went to retire and discovered the $4 million in U.S. stock he had been counting on had been seized and sold for $200,000 years earlier -- even though he was in touch with the company about other matters.
A Sacramento family lost out on railroad land rights their ancestors had owned for generations -- also sold off as unclaimed property.
"If I had hung onto it, I would be a millionaire, multimillionaire," said John Whitley. "But that didn't happen because we didn't get to hold it."
