The Facts: After my mother died, I found the passbook for a savings account she had at a local bank. I contacted the bank and was advised that the account was closed and that the funds in the account were transferred to the state a few years before my mother’s death.
The Questions: Can a bank simply close an account and turn the money over to the state? Can I reclaim the funds now that my mother has passed?
The Answer: Under the New York State abandoned property law, a bank can, in fact, transfer funds to the state from accounts that they deem dormant or abandoned. An account is assumed to have been abandoned if the account holder has had no contact with the bank for a specified period of time known as the dormancy period. As of April 1, 2011, the dormancy period in New York was decreased from five years to three years. In other words, if an account holder has no contact with the bank relating to his account for a period of three years, the bank can start the process of transferring the funds in the account to the New York Office of Unclaimed Funds. It is important to note that for purposes of the law, “contact” does not have to be deposit or withdrawal but can be a letter or phone call.
After the bank determines that an account has been dormant for three years, the bank has the obligation to notify the account owner that his/her assets may be been transferred to the state. The first notice is sent by first class mail. If the account holder does not respond, a second notice is sent by certified mail. If there is still no response from the account holder, the bank is required to place a notice in the newspaper. If at any time before the funds are transferred to the state someone comes forward claiming to be the account holder, the bank can ask for any documentation it deems necessary to insure that the person is actually the account holder entitled to the funds.
It is noteworthy that in addition to abandoned funds held in bank accounts, other assets ranging from security and utility deposits to insurance settlement checks to the contents of safe deposit boxes can also be transferred to the Office of Unclaimed Funds.
If abandoned assets are actually transferred to the Office of Unclaimed Funds, the original owner of the asset or her executor, administrator or heirs have the right to reclaim the property. As your mother’s heir, you will be able to reclaim the money she had in the savings account by contacting the Office of Unclaimed Funds at www.osc.state.ny.us/ouf/index.htm and making a claim. While you are on the site, it may be worthwhile to check for abandoned funds that may have belonged to you or to other relatives. With the increased mobility of our society, more and more assets are forgotten or overlooked and find their way into the hands of the Office of Unclaimed Funds.
This article first appeared in the July 26, 2012 issue of the Times Beacon Record Newspapers.
Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket, New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.