Colorado's Unclaimed Property Act: an Overview
| Publication year | 1988 |
| Pages | 57 |
| Citation | Vol. 17 No. 1 Pg. 57 |
1988, January, Pg. 57. Colorado's Unclaimed Property Act: An Overview
On July 1, 1987, Governor Romer signed into law the Colorado Unclaimed Property Act ("Act")(fn1) which provides that items of property that have been unclaimed for a period of time and that are held by banking or financial institutions must escheat to the state of Colorado. Colorado's travels into the unclaimed property area are not into uncharted waters. As of May 1, 1987, forty-eight states plus the District of Columbia had some form of an abandoned or unclaimed property act.(fn2)
The Colorado legislature attempted for many years to promulgate an unclaimed property act. The legislature's first successful attempt was embodied in House Bill ("H.B.") 1353,(fn3) an omnibus tax bill which included a variety of other revenue-raising and budget-cutting measures covering various topics. Because of the particular drafting and hearing process, the Bill received little outside input. Upon submission of gubernatorial interrogatories,(fn4) the Colorado Supreme Court found H.B. 1353 constitutionally deficient due to the number of subjects included in the Bill.(fn5)
The legislature then took the various subjects of H.B. 1353 and converted them into separate bills, and the escheat provisions became H.B. 1376. Again, with relatively little impediment and almost no outside influence, H.B. 1376 and H.B. 1368, containing technical amendments, were passed by the legislature and signed by the Governor.(fn6)
The Act applies to unclaimed property held by banking or financial organizations, including banks, trust companies, savings banks, industrial banks, safe deposit companies, private bankers, savings and loan associations, cooperative banks, building and loan associations, credit unions and any other organizations defined by other law as banks or banking organizations.(fn7)
The basic thrust of the Act is that all intangible property, including any income derived from such property, that is held in the ordinary course of business by a banking or financial organization and has been unclaimed for a designated period of time after it has become payable or distributable, is deemed abandoned. Intangible property is defined broadly and includes money, checks, deposits, credit balances, overpayments, gift certificates, stock and other intangible ownership interests in business enterprises, money deposited to redeem stocks, bonds or other securities and amounts distributable from funds established under plans to provide any type of employee benefits.(fn8)
The Act sets forth various rules for the different types of property. The general rule is that property that has been unclaimed for a period of five years after it is distributable or payable is deemed abandoned.(fn9) The general rule is applicable to unclaimed checks, property held for safekeeping or in a safe deposit box, and bank deposits and other funds in financial organizations.(fn10) The exceptions to the general rule are as common as the rule itself. For example, the period of abandonment for funds held in a fiduciary capacity for the benefit of others is only three years after such funds become payable or distributable.(fn11)
The presumption of abandonment will be rebutted if the owner of the property has communicated in writing with the banking or financial organization regarding the property, or has otherwise indicated an interest in the property as evidenced by a memorandum or other record on file at the organization. With respect to deposits or property held in a fiduciary capacity, any increase or decrease in the account by the owner or the presentation of a passbook for the crediting of interest will cause a rebuttal of the presumption of abandonment. The Act also permits a banking or financial organization to cross-reference accounts so that if an owner has another active relationship with the organization, such relationship will prevent an otherwise dormant account from being deemed abandoned.(fn12)
Typically, there will be no question as to when property becomes payable or distributable. However, because the date of distribution may be unclear with respect to IRA and similar accounts and certificates of deposit ("CDs"), the Act provides guidance. Funds held in IRA or similar accounts are not payable or distributable until distribution is mandatory under the terms of the plan or account.(fn13) CDs or other deposits that are automatically renewable are considered matured or payable upon the expiration of the initial period for which the funds were deposited.(fn14)
The Act also provides that banking and financial organizations are prohibited from imposing charges or ceasing the payment of interest on deposits due to the dormancy or inactivity in an account, unless there is a written contract between the holder and the owner of the property that describes the imposition of the...
To continue reading
Request your trial