BILL ANALYSIS
AB 2221
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Date of Hearing: April 9, 2008
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mark Leno, Chair
AB 2221 (Wolk) - As Introduced: February 20, 2008
Policy Committee:
JudiciaryVote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends, from three years to five years, the "escheat"
period-the time after which unclaimed property transfers to the
state-and revises and expands notification requirements for
holders of unclaimed property. Specifically, this bill:
1)Provides that specified intangible property held in the
ordinary course of the holder's business, and that has
remained unclaimed by the owner for more than five years
(instead of three years) after it became payable or
distributable, escheats to the state.
2)Requires the holders of certain property, including business
associations and banking organizations, to notify the owner
during three specified time periods rather than during one of
two specified time periods, prior to escheat.
3)Imposes specified requirements regarding the content of the
notice and allows the holder to provide additional notices
regarding escheat.
4)Provides that all property distributable in the course of a
dissolution or liquidation of a business association or an
insurer, that is unclaimed by the owner within one year
(instead of six months) after the date of final distribution
or liquidation, escheats to this state.
FISCAL EFFECT
1)Extending the escheat period from three to five years will
delay transfers of unclaimed property revenues to the General
AB 2221
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Fund for two fiscal years. Moreover, the State Controller's
Office (SCO) indicates that paying owner's claims during this
two-year period will require a transfer of monies back from
the General Fund to the Unclaimed Property Fund. The SCO
estimates that the net General Fund cost will be $517 million
in 2009-10 and $509 million in 2010-11.
2)The SCO will also experience a corresponding two-year
reduction in workload, representing savings of $116,000 (two
personnel-years) in 2008-09 and an additional $1.25 million
(22 personnel-years) in 2010-11. This staff will have to be
restored in 20011-12 to accommodate an influx in remittances
and new unclaimed property accounts.
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COMMENTS
1)Purpose . According to the author's office, current law does
not provide adequate protections for owners who have lost
track of their property. This bill, sponsored by the State
Controller, seeks to provide Californians having financial
assets held by a business or institution with sufficient
notice explaining that, after a period of account inactivity,
their property or asset may be escheated to the state. The
author's office argues that the current law of escheating
property after three years of inactivity is not enough time
for owners to locate and reinstate their property with the
business or institution holding the account. According to the
sponsor, the state often has to discard items that may be
invaluable to the owner, but, have little to no value to the
state.
2)Opposition . The Security Industry and Financial Markets
Association believes that the bill creates inherent delays in
the claim process, and argues that the additional due
diligence notification requirements are unduly onerous.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081