What Are Unclaimed Funds?

Unclaimed funds are funds that linger in old accounts. If you’ve ever handed over a deposit to a landlord or utility company, you could be due some money you don’t know about. There’s an easy process to tracking down these funds, which will then be mailed to you once your claims to the property have been verified. Whether you’re in America, Canada or another part of the world, your government likely has an unclaimed property division.

When a business has money that needs to be refunded, it generally will make a concerted effort to track down the owner of those funds. One example might be an old employer who still has your last paycheck. If you’ve moved away from the address that employer has on record, tracking you down may be tricky. Depending on the size of the business, your former manager may reach out by email or on social media but otherwise, she’ll just turn it over to the local government.

According to the National Unclaimed Property Network, an estimated $32 billion in unclaimed money is held by either U.S. or state governments. As it waits, unclaimed, in these accounts, the government collects interest on it, which means when you do finally realize it’s yours, you won’t get any extra money off of it. The National Association of Unclaimed Property Administrators maintains a portal that links to each state’s unclaimed property office. From there, you can search for property and claim anything that belongs to you.

In some cases, your unclaimed funds may be turned over to the federal government. This is often the case with tax refunds that never made their way to you or banks that shut down while you still had an account balance. Unfortunately, there is no centralized database, but you may find some of this money during your state search. You can also check the Wage and Hour Division's database on the U.S. Department of Labor’s website, as well as the Pension Benefit Guaranty Corporation’s unclaimed pensions database. The IRS also has a section on its site where you can check the status of your refund. Unclaimed refunds may show up there.

Some consumers don’t realize that if someone dies with a life insurance policy in place, the insurer doesn’t automatically notify its beneficiaries. If the deceased person doesn’t mention this beforehand or leave paperwork where it can be easily found, that money may go unclaimed. In 15 states, you can search to see if one of these policies exist. Those states are: Alabama, Kansas, Louisiana, Massachusetts, Missouri, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Texas and Vermont. If you don't live in one of those states or you aren’t sure a search turned up all your unclaimed funds, you can pay MIB Group $75 for a search of more than 400 North American insurers.

Unclaimed property in the form of past tax refunds or abandoned security deposits may be attached to original owners. However, there are instances where property is simply left behind, with no rightful owners in sight. If the property is in the form of a house or land, chances are somebody owns it. It may be the bank or even the government, but if you pull the information on the land, you’ll likely find an owner. If, however, you find an item like a mattress or $100 bill at the side of the road, the “finders keepers” rule will likely apply. That won’t stop the original owner from claiming it as theirs, if they can track you down and find it, but courts will generally rule with the finder. If you find that item on an owner-occupied piece of land, however, the courts will probably decide that it belongs to the person who lives there.

In some instances, the IRS will consider your unclaimed funds taxable, and you may get an unpleasant surprise once your check arrives in the mail. You’ll pay taxes on any proceeds you earned from the unclaimed funds, but the principal amount will be untaxed since it is simply your money being returned to you.

With so much unclaimed property still out there, it’s important to check if any of it belongs to you. If you do have unclaimed property, you can easily verify your identity and get a check in the mail. If not, you'll simply have wasted a few minutes searching a free resource.