Posted in Finance, Accounting and Economics Terms, Total Reads: 535
Definition: Abandoned Property
Abandoned Property also referred to as unclaimed property refers to any tangible or intangible assets that have remained dormant or unclaimed, over a specified period called the dormancy period. Abandoned property may include savings deposits, stocks, bonds, land, checking accounts, insurance payments or refunds, annuities, safe deposit boxes, etc.
Companies are required to perform due diligence to contact the rightful owners of the abandoned property via newspaper advertisements, etc. If the company fails to find the rightful owner and the property has remained dormant for a dormancy period as specified by state laws, they are required to report the same in accordance with the unclaimed property laws of the state. The task of looking for and reporting such property falls on the internal auditors of the company. The abandoned property is then transferred to the state through a process called escheatment, making the state responsible for holding the asset and allowing the rightful owner to claim the same. States can perform an audit for abandoned property to ensure that companies comply with unclaimed property laws. There are several government and commercial websites that aid in looking for abandoned property.
Examples of abandoned or unclaimed property include matured deposit accounts, unclaimed property, payroll outstanding to retired employee, uncashed cheques, etc.