We gave you an overview on escheatment in the last post, http://faoblog.com/processes-ap-payment-processing-escheatment/
One of our readers came up with a comment, “Interesting point but usually escheatment is against asset balances (held in custody for someone else) and not checks outstanding. The answer is pretty simple, “legal tendered checks expire and are not accepted after a maximum of 6 months with most institutions restricting it even further to 90 days.”
He was right on this, and that’s what we mentioned in our post, this amount “will be deemed to be unclaimed property” after a certain period of time. This is the essence of escheatment.
We cover this in the next steps given below.
- Once an account is deemed “abandoned” it becomes reportable to the state of the owner’s last known address and is subject to be escheated.
- Notification letters are mailed to customers at the address on file before any funds are disbursed to the state.
- The notification letter informs the customer the account is considered to be inactive / dormant and the customer may activate it by contacting the specified authority immediately.
The fundamental essence to this is to ensure that people who have not claimed their amounts for over 3 or 5 years, should be able to do it and the government / state will take over that amount to ensure the same.
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