Tuesday, June 18, 2002

abandoned property

Delaware's fourth largest source of revenue last year was $163 million from abandoned property. In addition to property that gets separated from its owners, who can't be found, there's a fair amount of property that belongs to someone else, but remains on the books of a business such as uncashed paychecks, unredeemed gift certificates, and unclaimed vendor checks. While this type of property no longer belongs to the businesses, they may be the only ones who know about it. Delaware tends to receive a lot of money from businesses that hold abandoned property because of legal rulings that have stated that if a property-owner cannot be found, the money should go to the State of the creditor's last known address. If that can't be determined, or if that State doesn't provide for the escheat process, the property would then go where the business holding the property is incorporated, (see Delaware v. New York, 507 U.S. 490 ).

How is the existence of abandoned property held by businesses uncovered? Delaware often relies upon the amounts being disclosed voluntarily by businesses during the merger and acquistion process:
Companies looking to buy other companies worry that if they don't spot the abandoned items on a seller's books before the states do, they could get hit later with a huge tab, including interest and penalties for not paying up.
For more on unclaimed property, visit the pages of the National Association of Unclaimed Property Administrators.

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