Corporate Vultures Circle the Dead for Profit, Seek Changes to Unclaimed Property Laws
Over the weekend, the New York Times published a sprawling, nearly eight thousand-word story detailing for readers the fate of those who die alone in the Big Apple.
Using the life and death of George Bell, who passed away some days before he was discovered in his home this past July, the Times recounts the painstakingly arduous process that New York City public employees embark upon to make certain the estates of people like Bell end up in the hands of its rightful beneficiaries.
In the case of Bell — spoiler alert — distant relatives and friends he had not communicated with in many years inherited his nearly half a million dollar estate no doubt surprised both to have been named beneficiaries in the first place and also that Bell could have had such ample means considering his modest lifestyle.
George Bell lived an obscure life and like thousands of other New Yorkers each year, he had no close family or friends to help settle his estate when the time came. While Bell’s beneficiaries were eventually united with their share of his estate, an untold number of Americans never learn that a loved one who has passed has made arrangements for them leaving behind life insurance policies, bank accounts, and other property.
By law, insurers and banks are required to try and find those entitled to this “unclaimed property.” How hard these companies actually work to carry out the decedent’s wishes is debatable. If they are unable to find the beneficiaries, they are required to turn the money over to state unclaimed property departments.
Perhaps it is just a coincidence, but all too often life insurance companies are unable to find the beneficiaries of a policy. If they fail to turn the money over to state unclaimed property departments and instead choose to sit on it, they are unjustly rewarded with the ability to continue profiting from the investment of someone who is now deceased.
In order to make sure this does not happen, states are authorized to audit these companies and often contract with professional non-government auditors to help assure compliance with state laws.
In a perfect world, that would be the end of this story but powerful corporate interests are working hard to quietly influence a little-known commission with the power to reshape state unclaimed property laws. These interests are single minded in their focus to make it far more difficult for states to return unclaimed property to its owners.
According to its website, the Uniform Law Commission (ULC) “provides states with non-partisan, well conceived, and well drafted legislation that brings clarity and stability to critical areas” of state law. In other words, this arcane non-profit organization gives states model legislation on a host of issues where having similar laws from state to state can be important.
The ULC’s involvement with state unclaimed property law dates back more than 60 years. Most recently, it made revisions to the Uniform Unclaimed Property Act in 1995, stating at the time that the measure was aimed at preventing “ordinary people for the most part, from losing their rights to property that is justifiably theirs. It is theirs because they earned it, inherited it, or were given it. Those entities and institutions that hold property are its custodians, not its owners.”
Now, almost exactly 20 years later, the ULC has convened a drafting committee to revise the Act. If this committee’s first round of suggested changes is any indication, it is the interests of the aforementioned “ordinary people” that appear to be in jeopardy. Since about 40 states have enacted some version of the ULC’s unclaimed property legislation, efforts to water down safeguards that protect hardworking Americans could have a disastrous impact.
A letter sent to drafting committee members by several national consumer watchdog organizations earlier this month detailed several of the “detrimental revisions” being considered noting they “would be harmful to consumers throughout the country, making it more likely that they will lose property that today would be found and reclaimed.”
That such dramatic changes to the Uniform Unclaimed Property Act are being considered is not by accident. Powerful special interests are actively pressuring committee members to alter the model legislation in their favor. Among those leading the charge are the American Council of Life Insurers (ACLI), whose member companies stand to make a windfall if laws are changed making it more difficult for states to recover unclaimed property and reunite it with its rightful owners. The ACLI’s efforts have the backing of America’s leading corporate special interest group — the U.S. Chamber of Commerce.
Meanwhile, Michael Houghton, a longtime ULC commissioner responsible for co-chairing the this drafting committee has fought to undermine state unclaimed property laws and works as a partner in a law firm whose clients would benefit greatly if the Act is gutted. In fact, a few years ago, Houghton co-authored an article praising state legislation to weaken Delaware’s unclaimed property law, indicating that while it did not go far enough “to completely address complaints [of] the national business community,” it was a step in the that direction “and hopefully the start of a process.”
It is hardly a surprise then that the “national business community” has taken such a keen interest in Houghton’s drafting committee.
The sad truth is that the Uniform Law Commission’s Drafting Committee to Revise the Uniform Unclaimed Property Act is considering a number of changes that would keep beneficiaries separated from property that is rightfully theirs for as long as possible and thus enabling big corporations like life insurance companies and banks to make even bigger profits.
That means, for example, hardworking men and women who do not know they are entitled to a claim on an insurance policy taken out by a loved one who has passed away will not receive money when it might be needed most. Worse still, these loved ones will lose the peace of mind they thought they had purchased with their policy.
Americans win when big corporations hand over unclaimed property to the states. Because states are legally obligated to return property to the owner whenever it is claimed, they make it easier for consumers to search through websites to see if they are entitled to unclaimed property they may not have even known existed.
If the ULC’s drafting committee is guided in such a way that it betrays a conflict of interest in its leadership or succumbs to pressure from industry, it is the “ordinary people” who will lose what they rightly earned, inherited, or were given. And it is precisely this type of corporate excess that this Uniform Unclaimed Property Act was initially developed to guard against.
Karl Frisch is a syndicated columnist and longtime political strategist. He is executive director of Allied Progress, a nonprofit organization that uses hard-hitting research and creative campaigns to hold powerful special interests accountable. You can join his email list or connect with him on Facebook, Twitter, Instagram, and YouTube.
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