Unclaimed & Abandoned Property: The Escheatment Process

escheatment, escheatment process, estate planning services, unclaimed personal property, Wheaton estate planning attorney, abandoned assets, abandoned property, unclaimed assetsWhile hardworking Americans do their best to ensure family and loved ones inherit their property and savings, unattended or abandoned assets risk being turned over to the state. This process is called “escheatment,” and it was established centuries ago to prevent unclaimed properties from sitting in limbo without a recognized owner.

According to the U.S. Securities and Exchange Commission, financial institutions in every state must file a report when personal property goes unclaimed or abandoned for a certain period of time. State laws establish these time periods.

Brokerage firms must abide by these laws, and for an account to be considered unclaimed or abandoned, a reasonable effort must be made to contact the owner of the account. If this proves unsuccessful and the account remains inactive for the specified time period, the state requires the firm to report the account. Through “escheatment,” the state claims ownership of the account.

The state treats these accounts as bookkeeping entries. Former account owners can make claims against these entries. Generally, the state will sell securities in these accounts and treat proceeds as state-held funds. If the account owner files a legitimate claim, the state may provide a cash payout equivalent to the account’s value before escheatment. This payout will not include interest or dividends from the time following escheatment.

The Escheatment Process at Work: A Recent Example

A recent article posted in the Madison Record reports the story of a maiden millionaire who passed away with no heirs. As a result, her $1.3 million estate was turned over to the state. Shortly after, the courts received more than two dozen ownership claims.

Such a scenario is a nightmare for anyone with relatives who own substantial property; however, million-dollar estates are not the only ones at risk. Bank accounts, retirement funds, money orders, and stocks are all susceptible to being reclaimed by the state after a certain period of time.

The best way to avoid escheatment is to contact a lawyer who provides estate planning services. Even if you do not have heirs, you can appropriate your funds and assets to charitable organizations or other causes.

If you require the services of a Wheaton estate planning attorney, Stock, Carlson, Flynn & McGrath, LLC can help. With a compassionate approach backed by 30 years of legal practice, our attorneys provide each client with the attention and guidance they need to develop comprehensive estate plans. To schedule an appointment, please call us at 630-665-2500.

Public Policy Changes May Have Negative Impact on Retirement Plans

IRA distributions, IRA wealth, Illinois estate planning attorney, reduce Social Security benefits, retirement plans, Social Security benefitsIf you are approaching the age of retirement, or are currently planning your finances for your golden years, you probably have been following a set plan. However, a recent article indicates a few proposed changes in the current public policy that are on the table for the 2015 fiscal year budget. And these changes could have a serious impact on retirement plans.

IRA Distributions

Currently, there are no required minimum distributions rules for ROTH IRAs. The pending change would reverse that by implementing required distributions after the owner is 70 ½ years of age. This can cause people to take out more money than they actually need instead of investing it. This has a trickle-down effect that includes higher taxation as well as a higher amount of Social Security being taxed.

Cap on IRA Wealth

Though the cap that is being proposed is substantial, it is still a cap. This change will impact only those that are used to a very high standard of living. The cap will be $3.2 million. Once that cap is reached, no further contributions will be allowed. The worrisome part is that the 401(k) and 403(b) is also included in the figure with the IRA. This would lead to a reduced amount of retirement savings for some.

Social Security Benefits

The proposed reduction of Social Security benefits could potentially be the most damaging as Social Security accounts for nearly 40 percent of retirement income. Possible changes include an extension of the retirement age as well as decreasing the monetary amount of the benefits. However, the greatest proposed change involves the claiming strategies for Social Security as the government is looking to “eliminate aggressive Social Security claiming strategies, which allow upper-income beneficiaries to manipulate the timing of collection of Social Security benefits in order to maximize delayed retirement credits.” This could change the planning strategies that are currently in place for middle and lower class retirees.

These changes could significantly impact your retirement planning. Hence, this is why it is so important to meet with an estate planner regularly to review your documents and discuss trusts or other vehicles. For questions regarding the 2015 proposed public policy changes and how they can impact retirement plans, please contact an experienced Illinois estate planning attorney today.

Lessons Learned From Farrah Fawcett’s Estate

The deaths of celebrities often have important lessons for estate planning. Failing to consider your estate in full can have ramifications for the beneficiaries and it can also mean that your intentions might not be carried out the way you thought after you have passed away. If you would like a review of your existing estate planning documents or if you would like to have a comprehensive evaluation of your needs, contact an Illinois estate planning attorney today.

Farah Fawcett estate IMAGE

When Farrah Fawcett passed away, her partner, Ryan O’Neal, took an Andy Warhol painting from her home, alleging that it was his. The University of Texas sued O’Neal because Fawcett’s revocable living trust outlined that all her artwork was to be given to the school. There were two copies of the painting in question, and the University of Texas had already received one of them, but this didn’t stop them from pursuing O’Neal for the other copy. Ultimately, O’Neal won the rights to keep the painting, and he stated that he plans to leave the painting for the child he had with Fawcett.

Fawcett’s estate illustrates just how easy it is to become confused by intentions with documents. When there are multiple copies of an item, or when estate planning documents don’t clearly identify particular items for another person to have, this can initiate arguments with other family members or even third parties, like Fawcett’s case. One way to combat potential arguments in the future is to outline your plans clearly within your will or your trust, making it clear the exact intent of your plans. When there is little ambiguity, there’s less arguments surrounding intention and a greater likelihood that your beneficiary can receive the items or assets that you want without the trauma of engaging in legal battles.

If you would like to set up a trust or will that clearly outlines your wishes, contact an Illinois estate planning attorney today.