OLR Bill Analysis

HB 5533

AN ACT CONCERNING THE TIME PERIOD FOR FUNDS TO ESCHEAT TO THE STATE.

SUMMARY:

This bill extends, from three years to seven years, the dormancy period in which certain funds held by financial institutions are deemed abandoned and are escheated (i.e., ownership transfers) to the state as unclaimed property.

The bill applies to the following property:

1. demand, savings, or matured time deposits made with a bank in Connecticut, including any interest and dividend less allowed charges;

2. funds paid in Connecticut toward the purchase of shares or other interest in a financial organization or any deposit made with such organization, including any interest and dividend less allowed charges; and

3. amounts payable on checks certified in Connecticut or on written instruments issued in the state on which a bank or financial organization is directly liable, such as money orders, drafts, and traveler's checks;

If any of the above funds relate to a self-employed retirement plan or an individual retirement account, established in accordance with federal law, by law they must not be presumed abandoned any sooner than six months after the date on which distribution of the funds is required to begin under federal law.

The law, unchanged by the bill, allows a five-year period before funds or personal property held in a safety deposit box, or similar safekeeping repository, escheat to the state as unclaimed property.

EFFECTIVE DATE: July 1, 2016

FUNDS HELD OR OWED BY A BANKING OR FINANCIAL ORGANIZATION

By law, property held or owing by a banking or financial organization is generally presumed abandoned after a specified dormancy period, unless an officer of the organization knows that the owner is alive or during the specified period the owner:

1. increased or decreased the amount of the investment or deposit, or presented an appropriate record for the crediting of dividends or interest (this does not apply to funds related to certified checks or other instruments for which the financial institutions are directly liable); or

2. corresponded in writing with the banking organization concerning the deposit or funds; or

3. otherwise indicated an interest in the deposit or funds as evidenced by (a) a memorandum on file with the banking organization or (b) the fact that the Internal Revenue Service Form 1099 sent from the banking organization to the owner is not returned to the banking organization by the U.S. Postal Service.

COMMITTEE ACTION

Judiciary Committee

Joint Favorable

Yea

28

Nay

17

(03/30/2016)