Escheatment

This is the term for the process, in the USA, Canada, and other jurisdictions, where assets are considered by a company to be dormant or unclaimed. Assets are reported to the relevant State or Province’s Unclaimed Property Department.

But the shares weren’t “unclaimed”!

Unfortunately, the State may think otherwise. Even if the shareholder, or their estate representatives, were alive and well and monitoring correspondence, there’s an invisible ticking clock and if the transfer agent believes a period – usually of about three to five years – has gone by with the account deemed “inactive”, then the holding will be passed to the State on the basis that it is dormant anyway. There is no set time limit, or a single set of rules, about when an asset escheats: it can be extremely unpredictable.

The Executors don’t have access to the deceased shareholder’s dividend cheques or account statements

It’s often the case that a shareholder moves away and forgets to arrange to change the address on their holding. In that case, the transfer agent will continue to send regular dividend cheques or statements out to the address they have on file, perhaps for a considerable time. If post sent out there starts to accumulate and is returned marked “gone away”, this could trigger the escheatment process.

How do we get the shares back?

If escheatment has already taken place, you may not be able to get the shares back as traded securities. Most securities reported to the relevant State’s Unclaimed Property Department are typically liquidated with immediate effect. The cash proceeds and any uncashed dividends will remain with the State (or Province) in perpetuity or until they are claimed by entitled parties. Most states don’t pay out any interest: they’ll just send a cheque in the post, without preamble or explanation, following completion of a successful claim.

Many states in the USA, where this arises most often, have a lengthy, opaque multi-part claim procedure to claim monies. It can be a time-consuming and consequently costly process to oversee to completion. Claimants must prove their entitlement and may have to submit numerous documents to support the claim. It’s important to know what has escheated so the viability of a claim can be assessed.

Finders can help you with this work, using our experience in this field to navigate the State’s requirements and help estate representatives to assemble the necessary documentation in support of a claim for escheated assets belonging to an estate. Please contact Louise Levene for advice and a quote.

The Executors have received a warning that the shareholder account is dormant and at risk of escheatment

It won’t be possible for the Executors of a deceased shareholder’s estate to change the registration address without transferring the holding formally, with a Medallion Guarantee stamp affixed. Finders can help you get the shares transferred out of the deceased’s name please contact Louise Levene for a quote