States Seek Unclaimed Property for Themselves, Owners Sue
Posted Feb 4, 2008 5:22 PM CST
By Martha Neil
Once upon a time, legislatures throughout the country enacted unclaimed property laws intended to make sure that banks and other companies holding assets that the owners seemed to have forgotten about made efforts to notify them.
But today a growing number of states are making it more difficult for owners to learn of unclaimed property and easier for the government to seize it, in an apparent effort to fatten government coffers by grabbing the forgotten assets themselves, reports the Wall Street Journal in a page one article today.
In some cases, huge amounts are at issue. And, when owners learn that they have lost valuable property to the state, litigation results, the newspaper reports. As discussed in earlier ABAJournal.com posts, the San Francisco-based 9th U.S. Circuit Court of Appeals ruled earlier this year that owners have a constitutional right to be notified before valuable assets are seized. That has prompted a subsequent change in the state's unclaimed property policy.
"Somewhere along the line, a good idea got lost," John Coalson tells the newspaper. An attorney in Atlanta, he represents companies being audited to see whether they are holding unclaimed property that the state can seize. "What was intended to return property to its rightful owner has instead become a way for states to increase revenue without increasing taxes."