July 1 was Michigan’s annual deadline for banks, businesses and public agencies to report property the state considers abandoned.
Now that another year’s worth of private money has moved into state custody, lawmakers should take a hard look at whether Michigan’s rules sweep up some accounts too quickly.
Joy Kooyer’s story suggests they do.
The Holland mother did what financial advisers tell parents to do. She set up automatic deposits into a savings account for her son’s college education. Money kept going in. The account held more than $10,000.
Then the bank closed it and sent the money to Michigan as unclaimed property. Why? Because automatic deposits did not count as owner “activity.”
That should scare every Michiganian with a savings account.
Kooyer had not forgotten the money. The account was doing exactly what a savings account is supposed to do: sitting there and growing. Yet she had to file a claim and wait to recover money she thought was safely in the bank.
Unclaimed-property laws serve a legitimate purpose. When a company loses contact with an owner, the state can protect the money until that person or an heir comes forward.
But custody is not ownership. Michigan should be careful before declaring private property abandoned.
Most Michigan property becomes unclaimed after three years. Payroll checks can move after one year. Three years is not long.
A college account can sit untouched that long. So can a retiree’s savings. People move, change email addresses, become ill or assume automatic deposits prove an account is active. Apparently, they can be wrong.
Michigan is holding about $2 billion in unclaimed property. The state says it has returned more than $675 million over the past five years. That is progress.
But Michigan still puts too much responsibility on owners. Residents must discover the database, search the right name, recognize an old address, gather documents and file a claim.
Worse, properties worth less than $50 are not shown on the public website. Reportedly, 17.6 million such properties were worth nearly $190 million combined.
Small money is still money.
A $12 refund matters. Several small claims belonging to a deceased parent can add up. If claims are hidden, residents cannot find them.
The July 1 deadline should have prompted a broader review of how Michigan defines and handles abandoned property.
Automatic deposits, online logins and other clear signs of ownership should count as activity. Holders should provide repeated warnings before transferring accounts. Treasury should list small properties, show exact amounts and automatically return straightforward claims when government records verify the owner.
Fraud and disputed estates will still require scrutiny. A live savings account should not.
On July 1, Michigan accepted another year’s worth of supposedly abandoned property.
That makes this the right time to ask whether the state’s rules still make sense.
Some Michigan money is not lost. The system takes it anyway.
Mark Lewyn is the founder of UnclaimedMoneyGuy.com and a former staff writer for BusinessWeek and USA Today’s Money section. He can be reached at mark@unclaimedmoneyguy.com.
This article originally appeared on The Detroit News: Michigan collected millions in ‘abandoned’ property. Some of it was never lost. | Opinion
Reporting by Mark Lewyn / The Detroit News
USA TODAY Network via Reuters Connect
By Mark Lewyn | USA TODAY Network
