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Lost & Found: How Business Owners Should Handle Unclaimed Property
This week, it was announced that Kentucky State Treasurer, Todd Hollenbach, has returned more than $100 million in unclaimed property to its rightful owners during his six years in office. According to Hollenbach, that is more than all the state treasurers combined returned in the 60 years before his administration. That is quiet an impressive statistic.
So, what is this unclaimed property, exactly? And how does it affect you as a business owner? Unclaimed property generally consists of payroll checks, unclaimed safety deposit boxes and vendor checks that have remained unclaimed by their owners after several years.
Any holder of unclaimed property (a "holder" is any business entity with two or more individuals doing business in Kentucky) is required, by state regulations, to report all unclaimed property, no matter how small (with an exception for wages less than $50), to the Kentucky State Treasury. In addition to reporting requirements, businesses may also be required to notify the owner, in writing and at his last known address, about the unclaimed property if it is valued at $100 or more. The exact requirements and legal presumptions differ based on who is holding the property; therefore, financial institutions, life insurance corporations, insurance carriers, business associations and fiduciaries should carefully review KRS 393 to understand their specific obligations.
Holders who fail to report, pay or deliver property within the time prescribed by law are subject to penalties contained in KRS 393.990, including fines and imprisonment. Once a holder turns over property to the treasury office, the office assumes custody of it and is responsible for the safekeeping thereof. By turning over unclaimed and abandoned property in a timely manner, businesses can eliminate the headaches and possible liability that accompanies such property.
The Kentucky State Treasury works hard to find taxpayers who are owed money or assets. When property remains unclaimed for a statutorily-set period of time, it then goes to the state's General Fund to pay for education and other state programs, thereby benefitting all Kentuckians. Treasurer Hollenbach has an impressive track record of getting property back to its rightful owners, but it takes the assistance and cooperation of businesses to make the department's initiatives successful.
If you are a business owner and are unsure how to return abandoned or unclaimed property in your possession, contact a McBrayer corporate attorney for assistance.
James H. Frazier, III is the Managing Member of the firm, a position he has held for over 18 years. Mr. Frazier's practice focuses on real estate, bankruptcy, mergers and acquisitions and general corporate practice with special emphasis on mineral and energy law. He can be reached at firstname.lastname@example.org or (859) 231-8780, ext. 303.
This article is intended as a summary of state and federal law and does not constitute legal advice.