United States: Michigan Unclaimed Property Act Reduces Holding Periods and Alters Notification Requirements

Effective October 12, 2004, Michigan’s Senate Bill 1340 ("S.B. 1340") amended the Michigan Uniform Unclaimed Property Act (the "Act") to shorten the time period in which certain unclaimed property would be presumed abandoned and alter the notification requirements.¹

Holding Periods Reduced Michigan’s S.B. 1340 shortened the time period in which "stock, share, or other intangible ownership interest in a business association" would be presumed abandoned. Prior to this amendment, this type of interest was presumed abandoned if a dividend, distribution, or other sum payable as a result of the interest remained unclaimed by the owner for 7 years and the owner, within the 7 years, had not communicated with the business association regarding the interest or amount payable. The Act defines "business association" as a "nonpublic corporation, joint stock company, investment company, business trust, partnership, or association for business purposes of 2 or more individuals, whether or not for profit, including a banking organization, financial organization, insurance company, or utility."² S.B. 1340 reduced the time period from 7 years to 3 years.

Under S.B. 1340, "[a]ny stock, share, or other intangible ownership interest in a business association, the existence of which is evidenced by records available to the association," would be presumed abandoned if both of the following apply: (i) for more than 3 years, the owner of the interest has not claimed a dividend, distribution, or other sum payable as a result of the interest, or has not communicated with the association regarding the interest or amount payable, and (ii) the association does not know the location of the owner at the end of the 3-year period. In addition, under S.B. 1340, "any stock or other intangible ownership interest enrolled in a plan that provides for the automatic reinvestment of dividends, distributions, or other sums payable as a result of the interest" is presumed abandoned if the owner has not communicated with the business association for at least 3 years, instead of 15 years prior to the amendment, and at least 3 years have elapsed since the owner’s location became unknown to the business association. The definition of "business association" remains the same.

S.B. 1340 also altered the notification requirements. Prior to the amendment, the Department of Treasury must annually publish a list of owners in the counties containing their last known address. Under S.B. 1340, the Department of Treasury must publish, twice each year in a newspaper that has statewide circulation, a notice that contains the Department’s website address, telephone number, the number of new properties that have been added to the website, and a statement that the Department’s website may be searched from a local public library.

The Department of Treasury, which administers the unclaimed property program, estimates that S.B. 1340 will generate a onetime increase in revenue from unclaimed property of $8.0 million in fiscal year 2004-05.³ The increased revenue will go into the General Fund/ General Purpose budget. Furthermore, the cost to administer the program should decline by about $0.8 million beginning in fiscal year 2004-05 as a result of requiring greater use of the Department of Treasury’s website to provide the public with lists of "holders" of unclaimed property, and less use of published notices in newspapers to distribute this information.⁴

According to Gonzalo Llano, division administrator of the Unclaimed Property Division of Michigan Department of Treasury, the reason for reducing the holding period from 7 years to 3 years probably is, "if stockholders were lost, they would be lost to their transfer agents way before seven years."