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Texas responds to UPPO’s request for clarification of H.B. 1454

Posted By Administration, Thursday, May 18, 2017

Passed in June 2015, Texas law H.B. 1454 goes into effect on Sept. 1, 2017. The law allows property owners to designate a “representative for notice,” which triggers a requirement that the holder must mail or email the required due diligence notice to both the representative and the owner.

 

Representatives may not claim or access the owner’s property, but can stop the dormancy period by communicating with the holder knowledge of the owner’s location and confirmation that the owner has not abandoned the property. The new requirements also require holders to include the name and last-known mailing or email address of the representative when reporting unclaimed property.

 

In December 2016, UPPO posed several questions to Texas unclaimed property officials in an effort to receive clarity about the new requirements for the holder community. On April 24, 2017, Texas responded. The letter from Texas is prefaced with a statement advising that the letter is intended to provide general guidance and that no formal changes have been adopted by the Texas Comptroller of Public Accounts (comptroller).

 

Covered property types

UPPO sought clarity regarding which property types are covered by the law, specifically asking if IRAs and both open-end and closed-end mutual funds are covered. In its response, Texas specified that funds deposited with a bank or other financial institution in an interest-bearing account, checking account or savings account are included. This includes mutual funds held in an IRA, but those “would not be subject to abandonment until they would normally be reportable as unclaimed property.”

 

Methods to obtain representative information

Texas clarified that although the comptroller will provide a form holders may provide to owners to designate a representative it is not required and therefore other methods used to collect this information are acceptable. Texas expects to make the form available before Sept. 1, 2017, and “anticipate[s] that holders will inform customers of the option to designate a representative.”

 

Criteria for becoming a representative

UPPO requested clarification regarding specific criteria for being designated a representative and whether the designated person has to provide consent. Texas responded that it anticipates requiring that the representative be an individual over 18 years old who does not own the account. The state doesn’t anticipate requiring a legal relationship between the owner and representative, or requiring consent.

 

Duration and reporting of representative appointment

Texas anticipates its representative designation form will give holders the ability to specify the duration of the designation, according to the letter. Without such stipulation, the designation would be perpetual unless revoked. It seems likely that the form will actually give the ability to specify the duration of the designation to owners—not holders—and that the wording in the letter was an error.

 

Holders would not need to notify the comptroller of changes to designated representatives, only to list them when reporting unclaimed property. The comptroller is updating its electronic holder report format to accommodate representative details. The updated format should be announced before Sept. 1, 2017.

 

Multiple accounts

The state clarified that the representative designation form will give owners the ability to specify the accounts for which the representative is a designee. There will be an “all accounts” option. Communication from the representative regarding one account does not affect the abandonment period for any accounts for which that person is not designated as a representative.

 

UPPO will continue to monitor implementation of H.B. 1454 and will report on additional developments as needed.

 

 

Tags:  compliance  due diligence  Texas  unclaimed property 

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