What Happens to Dormant Bank Accounts?

What Happens to Dormant Bank Accounts?
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Having your bank account go dormant happens more often than you might think. Forgetfulness, lack of use, divorce and death are all common reasons behind bank accounts becoming dormant. Despite the fact that the money still belongs to the customer when accounts go dormant, it does become an increased hassle to receive the money when accounts are inactive, especially when it's reached the stage where they're taken over by the state. If you have a dormant account, know your state's proper protocols to ensure you get your money back.

Inactive Period

Time frames vary from bank to bank and differ depending on the type of account the customer has. Generally, though, there is a time frame of two to five years for a long-term savings account and slightly shorter for checking accounts. If customers have not initiated activity during this period, the account is deemed inactive. The time of inactivity also depends on state regulations.

Contact the Customer

Contacting the account holder is the next step once the account is inactive. This takes place before the account is seized under state control. Several attempts are made to contact the account holder and, depending on the policy of the bank, the type of account and the amount of time that you have not responded to the attempts to contact you, the account will be turned over to the state. Some banks will attempt to contact the customer by traditional mail. If the letter gets returned to them marked with a notification that you don't live at that address anymore, they'll try to contact the account holder via telephone, e-mail or any other contact methods they've submitted.

Account Is Taken Over by the State

If there is no response from the account holder, the state takes action. The process in which the bank takes control of the account is formally called "escheating." If the account has remained inactive for an allotted time, the funds in the account are given to the state treasury. After this has taken place, the funds are considered unclaimed property. At this stage, if customers wish to reclaim their money, they must deal with the state rather than the bank itself.

Reclaiming Money

Because of their classification as unclaimed property, funds are very hard to retrieve once they have been taken over by the state. Each state has different rules and regulations regarding retrieving money from dormant bank accounts, so check with your state for the specifics on how to get your money back. Likely you will need to submit a claim form and identification to the finance department of your state government.