BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 495|
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THIRD READING
Bill No: SB 495
Author: Fuller (R)
Amended: 5/10/11
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 5/3/11
AYES: Evans, Harman, Blakeslee, Corbett, Leno
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/26/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : Unclaimed property
SOURCE : California State Controller
DIGEST : This bill makes various changes to the Unclaimed
Property Law. Specifically, this bill (1) increases the
dormancy period for contents of safe-deposit boxes from
three to five years before they escheat to the state, and
increase notification requirements for holders of unclaimed
property; (2) requires the contents of safe-deposit boxes
held by a business association (holder) to escheat to the
state if unclaimed by the owner for more than five years
from the date on which the lease or rental period on the
box expired (rather than three years); (3) requires the
holder of an unclaimed safe-deposit box to provide notice
at two different times before the contents become
reportable to the state, rather than the single notice
required under existing law, by adding a notice at two and
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a half to three years prior to escheat to the state; (4)
requires the notice include a form that could be filled out
and returned by the owner of the property to declare an
intention to maintain the safe-deposit box, which would
prevent the contents from escheating to the state; the
owner could also contact the business association by phone
or electronic means to declare the intention; (5)
authorizes the holder to charge a fee of up to $2 to cover
the administrative costs associated with mailing the notice
and form; (6) authorizes a business association to provide
electronic notice to a person opening an account for a safe
deposit box that their property may escheat due to
inactivity, as specified, and requires written notice if an
electronic notice is returned undeliverable; (7) requires
the State Controller (Controller) to hold safe deposit box
contents with no commercial value for seven years, rather
than the current requirement of 18 months; and (8) requires
the Controller to establish a compliance program to
identify holder of unclaimed property who are not in
compliance with specified report filing requirements.
ANALYSIS : Existing law, the Unclaimed Property Law,
provides that funds held by a business association in an
individual retirement account or under a retirement plan
for self-employed individuals or similar account or plan
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: (1) increased or decreased the principal; (2)
accepted payment of principal or income; or (3)
corresponded electronically or in writing concerning the
property or otherwise indicated an interest. (Code of Civil
Procedure �CCP] Section 1513(a)(6).) Existing law provides
that the above funds 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. (CCP Section 1513(a)(6))
Existing law provides that all tangible and intangible
personal property located in this state, as specified, and
the income on that 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
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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. (CCP Section 1518.)
Existing law provides that funds in an individual
retirement account or retirement plan for self-employed
individuals or similar account 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. (CCP Section 1518(b))
This bill, instead, provides that the funds are not
considered payable or distributable unless: (1) under the
terms of the account or plan, distribution of all or a part
of the funds would then be mandatory; or (2) for an account
or plan that is not subject to a mandatory distribution
requirement under the internal revenue laws of the United
States or laws of this state, the owner has attained the
age of 70 and one-half years of age.
Existing law provides that the contents of a safe deposit
box or other safekeeping repository, held by a business
association in this state, escheats to the state if it
remains unclaimed for more than three years from the date
on which the lease or rental period on the box or other
repository expired, or from the date of termination of any
agreement by which the box or repository was furnished to
the owner. (CCP Section 1514)
This bill increases the holding period, from three years to
five years, of property contained in a safe deposit box or
other safekeeping repository before the property escheats
to the state.
Existing law requires the holder of the property in a safe
deposit box or other safekeeping repository to provide
notice to the owner that the property may escheat to the
state. That notice must be provided no less than six nor
more than 12 months before the property becomes reportable
to the Controller. The notice must contain a heading that
states "THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU
THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE
STATE IF YOU DO NOT CONTACT US," or similar language, and
include specified information. (CCP Section 1514)
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This bill additionally requires notice to be given no less
than two and one-half years, but not more than three years,
before the date the property becomes reportable to the
Controller.
This bill requires the notice to include a form, as
prescribed by the Controller, by which the customer may
declare an intention to maintain the safe deposit box or
other safekeeping repository by either renewing the lease,
rental period, or agreement, or otherwise taking possession
of the property from the business association. If that
form is filled out and returned, it shall be considered a
claim, as specified, and the contents shall not escheat.
This bill provides that, in lieu of returning the above
form, the business association may provide a telephone
number or other electronic means to enable the owner to
contact that organization. The contact, as evidenced by a
record on file with the association, shall be considered a
claim and the contents shall not escheat, as specified.
This bill authorizes a business association to impose a
service charge on the safe deposit box or safekeeping
repository for the administrative costs of mailing the
above notice in an amount that shall not exceed $2 per
required notice.
Existing law provides that for new accounts opened for a
safe deposit box or other safekeeping repository on and
after January 1, 2011, the business association shall
provide a written notice informing the owner that the
property may be transferred to the appropriate state upon
the running of the time period specified by state law.
(CCP Section 1514(j))
This bill provides that if the person opening the account
has consented to electronic notice, the notice may be
provided electronically.
Existing law requires the Controller to retain delivered
unclaimed property that has no apparent commercial value
for a period no less than 18 months. Property may
thereafter be destroyed or otherwise disposed of, and no
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action against the Controller or the holder of the property
may be brought or maintained. (CCP Section 1565)
This bill extends the Controller's holding period for
property that has no apparent commercial value from not
less than 18 months to not less than seven years.
Existing law requires that every person holding funds or
other property escheated to the state must report specific
information to the Controller, including the last known
address of each person appearing from records to be the
owner of any property with a value of at least $50 that has
escheated under the UPL, as specified. (CCP Section 1530)
This bill requires the Controller to establish a compliance
program to identify holders of unclaimed property who are
not in compliance with the above report filing
requirements.
This bill makes other technical, clarifying changes.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Extended escheat period
$1,200General
Holding items of no value
$152General
Compliance program staff $261 $528
$528General
Compliance program revenues ($5,021)
($11,7110) General
NET costs/(revenues) $261 ($4,493)
(9,831)General
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SUPPORT : (Verified 5/26/11)
California State Controller (source)
ARGUMENTS IN SUPPORT : According to the author, "SB 495
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."
RJG:kc 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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