Q. I am a longtime investor and left money in a mutual fund that was doing quite nicely over the years. I? never added to it, but it was growing. I received regular statements from the fund company, and I have kept them in a file.
So imagine my surprise when I received a letter saying they were going to turn my account over to the state as "abandoned property." Where did they get that idea? I called them and put a stop to it, but please warn people.
A. What you are describing is a process called "escheat" — by which financial institutions are required to turn over unclaimed property to the state. It's hard to imagine simply forgetting about a bank account, mutual fund, insurance policy or safe deposit box.
But it obviously happens all the time. Sometimes it's because there is no activity in the account. Other times it is because someone died and never let family members or heirs know about accounts or property.
According to the website MissingMoney.com, where you can search state records to see if your name is on the list of unclaimed property, there is more than $32 billion waiting to be claimed. And you don't have to fall for scams offering to get your escheated assets back for you, after taking a cut.
You can go directly to the state treasurer to make your claim, backed up by appropriate documentation.
It's rare that a mutual fund account could fall into this category, but it almost happened to me a few years back. I had one fund in an IRA that I planned to hold for the very long run. So I filed away my monthly statements as they arrived and had my dividends automatically reinvested.
Imagine my surprise when I received a letter from the company telling me that if I did not respond immediately, my account would be given to the state. Needless to say, I complained loudly.
So here's what you must do if you're a buy-and-hold investor who is content to leave a position unchanged for five years or more. (That's the typical time an account must be inactive before a financial institution might consider it abandoned, although some states have much shorter time limits.)
Make a transaction every year. Add more money to your account. Or contact the fund company and make sure they document the fact that you are in touch and in control.
Check with your state treasurer's unclaimed property lists to see if your name, or a deceased relative's name, might be on it. Money is held in trust for eventual return to owners, though stocks, mutual funds and safe deposit contents may be sold and converted to cash.
One final tip: Make sure your heirs know about all your accounts. Go to TerrySavage.com, fill in the yellow box, and by return email you will get a link to my Personal Financial Organizer form.
You can print out as many copies as you want. Fill it out, listing all your accounts and insurance policies. Then leave it in a place where your heirs could easily find it — and all your assets.
Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5's 4:30 p.m. newscast, and can be reached at www.terrysavage.com. She is the author of the new book, "The New Savage Number: How Much Money Do You Really Need to Retire?" To find out more about Terry Savage and read her past columns, visit the Creators Syndicate Web page at www.creators.com.
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