how a dormant account works
accounts that can be declared dormant include checking and savings accounts brokerage accounts 401 k accounts and pension fund accounts the contents of safety deposit boxes also may be declared unclaimed property the inactive period before an account is declared dormant may be as short as two years an account becomes dormant if its owner does not initiate any activity for a specific period of time an activity can include contacting a financial institution by phone or internet logging into the account withdrawing or depositing money or receiving a payment from a third party interest or dividend payments that are posted automatically to checking savings or brokerage accounts are not considered to be activity if your bank fails your account or safety deposit box will normally be held by the bank that took over the assets or by the fdic if the account was deemed inactive it may be held by the state in which the account was opened the fdic has online resources for those who have deposits in institutions that have failed 12in some states financial institutions are required to make an attempt to contact the owners of dormant accounts using the most recent mail contact information on file if the attempt to find the owner is unsuccessful the assets in dormant accounts become unclaimed property and must be transferred to the state s treasury department in california for example checking savings and brokerage accounts must see no activity for at least three years in order to become dormant 3 in the state of delaware there is a five year dormancy period for the same types of accounts 4a statute of limitations usually does not apply to dormant accounts meaning that funds can be claimed by the owner or beneficiary at any time in the future the escheatment process for dormant accountsescheatment is the legal process for transferring unclaimed property to the state account owners can reclaim assets that were deemed inactive and transferred to the state states have enacted escheatment statutes that govern the process of transferring unclaimed funds to the state and protect the unclaimed funds from reverting back to financial institutions escheatment state laws require companies to transfer unclaimed property from dormant accounts to the general fund of a state for safekeeping the state takes over record keeping and the returning of lost or forgotten property to owners or their heirs if the owner has passed away owners can recoup unclaimed property by filing an application with the state in which the account was opened at no cost because the state keeps custody of the unclaimed property in perpetuity owners can claim their property at any time in some cases property such as stock shares may have been sold by the state in that case the cash value of the shares is paid out to the claimant examples of state processes for reclaiming propertyevery state has its own policies and processes for allowing people to reclaim assets from inactive accounts that have been turned over to the state california for example maintains a searchable database that allows potential claimants to search by social security number the state of florida has a search function that it calls the florida treasure hunt as that title implies states are actually eager to return unclaimed property after all they have the recordkeeping responsibility but don t get to use the cash 