How Do I Inherit Hidden Holdings?

My dad’s brother died a few years ago. I didn’t know that side of the family very well. It wasn’t just only-saw-them-on-holidays, it was more like never-saw-them-at-all. They were the weird side of the family. Or, maybe we were.

However, I ended up getting in touch with his son, who turned out to be very nice. I learned that my uncle had a will, and all of his brother’s kids were beneficiaries. That includes me. Why I’m learning this now, and not when they were taking care of the estate, I don’t know, but I’m still happy that I asked or I would never know. I tried asking after it, but it proved to be a dead end, and I don’t really want to be that cousin that goes crazy at the scent of money. Here’s the really weird and confusing part: apparently, once they couldn’t find me, they just left the money as unclaimed with the state. We’re not talking like twenty dollars. It’s a big chunk of change. Have I lost it down a black hole? Do I have to hire a lawyer? How do I check to see if I’m owed money? What do I do?

Wow! That’s really good of your family that they didn’t just take the money themselves. Lord knows they could have. However, a will is a will, and whoever they hired to close the estate probably thought it was easier to designate your cash as unclaimed property than to try to track down the estranged cousins (i.e. you). Lucky for you, tracking the money down may be easier than you think.

First step: Verify. Verify. Verify. Whatever state your uncle lived in is probably holding the money in escrow until you claim it, depending on how long it has been since he died. When life insurers, estate lawyers, closed bank accounts, etc. can not find the beneficiaries of an estate, they tend to hold onto it for three years before passing it along to the state for safekeeping. The federal government holds on to tax refunds and stuff related to the IRS. You have to figure out where the money is to track it down.

There is no consolidated government-run site that tracks unclaimed property held in escrow by the state. This means that any search of yours must navigate a jungle of sites that promise you all manner of services. As with most things on the internet, it can be difficult to tell who is real, and who is a fraud. In general, there are two types of sites that help you look for unclaimed money: private (i.e. paid for) and public (i.e. government-approved). I will go over both.

Private sites will run a wide-ranging unclaimed money search, trawling through several databases and list claims, not only from states, but from businesses, life insurers, pensions, and bank closures, as well. They will then return a claim sheet, which you can use to look up what you might be owed, and who has it.

This site from the US Government directs you to the various free databases that list unclaimed property. These databases are specific to specific fields, and a private site will trawl them all for you at once. Like the private sites, however, they return a similar claim sheet, which will show you what might be owed.

From a private or public site, you will then need to find the claims office of the individual state in which that the money is being held. Neither of these types of sites gets the money for you. Once you determine which state the money is being held in, you need to fill out a form with the state’s unclaimed property office proving your identity as the one entitled to the money. Some states also require additional manners of identification, such as a W9 (you file it when you get a new job, and get it for free from the IRS), or your driver’s license. Once you submit all of those necessary forms, it is a matter of waiting. The unclaimed property division may contact you with more questions, or they may promptly deliver the funds to you. Either way, it can take a little while for the process to happen, so don’t plan on getting the money in time to pay next month’s rent.

Say you strike it big, and you end up with a big check sitting on your table. What do you do then? Cash it! However, not so fast! According to Zacks Investment Research, a market research firm, depending on the type of unclaimed property, you may be liable to pay taxes on it. From your story, it seems very possible that you will need to pay taxes. Nobody wants to pay taxes, of course, but it can save you from the eventual burden of additional fees, a federal tax lien or levy, or, worst of all, an audit. You can learn about all of these fun topics over on the IRS’ website.

Now, you’ve got the money, you’ve paid your dues, and you’re ready to rock and roll. Or, are you? I wouldn’t be writing much of an advice column without doling out some (in this case solicited) advice, so I’ll answer that question so many of us want to answer, and that is: what should I do with a sudden cash windfall? Many sites, such as FidelityThe Balance, offer advice on what to do in this happy case. However, in every case, the first piece of guidance they give is to take it slow. It is tempting to blow through it, but it’s better to use your discretion and parse it out to where you will most need it. Set aside some for fun, but consider paying off credit card debt, school debt, and personal loans. Then, create an emergency savings account. Last, consider investing. It’s great to have some money now, but isn’t it better to have more money later, without having to touch it? Your future self will thank you for your foresight.

“Sometimes the poorest man leaves his children the richest inheritance.” - Ruth E. Renkel

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