BILL ANALYSIS Ó
SB 495
Page 1
SENATE THIRD READING
SB 495 (Fuller)
As Amended July 5, 2011
Majority vote
SENATE VOTE :39-0
JUDICIARY 10-0 APPROPRIATIONS 16-0
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|Ayes:|Feuer, Wagner, Atkins, |Ayes:|Fuentes, Harkey, |
| |Dickinson, Beth Gaines, | |Blumenfield, Bradford, |
| |Huber, Huffman, Jones, | |Charles Calderon, Campos, |
| |Monning, Wieckowski | |Davis, Donnelly, |
| | | |Dickinson, Hall, Hill, |
| | | |Lara, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Makes several changes to the Unclaimed Property Law
(UPL) to increase the period of time the State Controller
(Controller) must hold property that has been delivered to the
state under the UPL. Specifically, this bill :
1)Extends the period of time that property of no commercial
value must be held by the Controller from 18 months to seven
years.
2)Provides statutory authorization for a compliance program,
which was funded in the 2011-2012 Budget Act, for the
Controller to identify holders of unclaimed property who are
not in compliance with filing reports.
3)Exempts tangible or intangible property from escheating to the
state if the fiduciary and owner of the property have taken
specified actions regarding the property.
4)Makes other technical and clarifying amendments, including
property holder reporting requirements.
EXISTING LAW :
1)Provides that funds held by a business association in an
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individual retirement account or similar account or plan, if
established pursuant to the internal revenue laws of the
United States or of this state, escheat to the state when the
owner, for more than three years after the funds become
payable or distributable, has not done any of the following:
a) increased or decreased the principal; b) accepted payment
of principal or income; or, c) corresponded electronically or
in writing concerning the property or otherwise indicated an
interest.
2)Provides that the contents of a safe-deposit box held by a
business association shall escheat to state if unclaimed by
the property owner for more than three years. Requires the
business association that holds the property to notify the
apparent owner, if known, no sooner than 12 months before the
property is reportable to the Controller and no later than six
months before that date.
3)Provides that any dividend, profit, distribution, interest,
payment, or other sum held by a business for a shareholder,
certificate holder, or other security holder who has not
claimed it, or has not corresponded with the business about
it, within three years after the date prescribed for payment
or delivery, escheats to the state.
4)Provides that all property held in a fiduciary capacity for
the benefit of another person escheats to the state if after
it becomes payable or distributable, the owner has not, within
a period of three years, increased or decreased the principal,
accepted payment of principal or income, corresponded in
writing regarding the property, or otherwise indicated an
interest.
5)Provides that funds in an individual retirement account or
retirement plan for self-employed individuals or similar
accounts are not considered payable or distributable unless
under the terms of the account or plan distribution of all or
part of the funds would then be mandatory.
6)Provides that all tangible property located in this state,
except as provided, that is held in the ordinary course of the
holder's business and has remained unclaimed by the owner for
more than three years after it became payable or distributable
escheats to the state.
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7)Provides that property with no apparent commercial value that
is delivered to the Controller shall be retained by the
Controller for a period of not less than 18 months from the
date the property is delivered to the Controller. If the
Controller determines that any property has no apparent
commercial value, he or she may thereafter destroy or
otherwise dispose of the property.
FISCAL EFFECT : According to the Assembly Appropriations, minor
annual costs to the Controller for additional storage associated
with the extended period to hold property with no commercial
value.
COMMENTS : The Unclaimed Property Law requires that funds held
by a business association in various accounts or in safe-deposit
boxes will escheat to the state after a designated period of
time if the apparent owner fails to take any actions to claim
that property or otherwise correspond with the holder of the
property. This can happen for a variety of reasons, but most
often it is due to a death, relocation, or transfer of property
to an heir or relative with little or no knowledge of the
account. At a certain point, usually after three years of
non-activity or abandonment, the business holder reports it to
the Controller and the property escheats to the state. The UPL
also specifies the amount of time that the Controller must
retain the property before selling or disposing of it, assuming
the rightful owner cannot be located. This bill seeks to extend
the amount of time that the property of no commercial value is
held by the Controller before disposal or liquidation. The
object of the bill is to ensure that more property is returned
to the rightful owner.
According to the author, this bill "is intended to further
address the problems and concerns of the state's unclaimed
property program by ensuring that as much personal property as
possible never escheats to the state while helping to return
property that has escheated to its rightful owners."
According to California State Controller John Chiang, the
sponsor of this bill, the Controller's office receives numerous
complaints about property that was turned over too quickly to
the state or which the state disposed of too quickly as property
with "no commercial value," even though that property had great
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sentimental value to the owner. The Controller claims that he
has made the return of unclaimed property to its rightful owners
"one of Ýhis] top priorities." The Controller believes that the
bill will, among other things, aid him in this effort to
increase the amount of time that the Controller must hold the
property from 18 months to seven years and establish a program
to bring businesses that are not complying with the unclaimed
property law into compliance.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN: 0001789