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Debrief of UPPO’s ULC Issues Refinement Submission

Posted By Administration, Tuesday, October 6, 2015

The Uniform Law Commission (ULC) is holding its drafting committee to revise the Uniform Unclaimed Property Act (drafting committee) meeting, Oct. 9 – 10 in Washington D.C. In preparation for the meeting, UPPO honed in on the issues most important to holders at this moment, and addressed them in its latest submission, titled UPPO Issue Refinement – 1995 Uniform Unclaimed Property Act Revision. 

 

The document tackles 15 issues, including, securities-specific issues, enforcement recommendations, property exemptions, and more, and provides draft language or changes when applicable for the drafting committee to consider in future drafts of the revised Uniform Unclaimed Property Act (RUUPA).  

 

Below are summaries of UPPO’s stance on select issues included in the document, and when applicable an explanation of how the issues have been altered or addressed in the latest version of the RUUPA, which was released Sept. 29, 2015. View the latest UPPO submission for additional detail.

 

Definition of securities
As stated in the latest version of the RUUPA, a suggestion was made from the floor during the ULC Annual Meeting in July, to include a definition of security in the RUUPA. Since the Annual Meeting, three definitions have been submitted, one from NAUPA, the Investment Company Institute, and UPPO.

 

The following definition was crafted by UPPO and key industry stakeholders: Securities means an instrument, whether certificated or uncertificated, that represents an ownership position or rights to ownership in a corporation, trust, plan, or other legal entity, any customer security account held by a broker-dealer, and any interest in an investment company under the Investment Company Act of 1940.

 

See page 22 of the current RUUPA version for the other two definitions.

 

ERISA Exemption
UPPO supports the exclusion of ERISA-protected assets from unclaimed property reporting requirements. 

 

B2B exemption
In UPPO’s latest submission, UPPO recommended the drafting committee adopt Alternative B (c) as the singular B2B exemption in the RUUPA, which would have been a blanket B2B property exemption.

 

Since then, the drafting committee has revised the current version of the RUUPA to exclude both Alternative A and B, and instead allow the adopting state(s) to include a current B2B property exemption or adopt another form of a B2B exemption. This issue will likely see discussion during the upcoming drafting committee meeting. An update will be provided following the meeting.

 

Contact
Currently, there are brackets (indicating that it’s optional for states to adopt) around a provision which would allow making a deposit or withdrawal from an account in which the property is held, including automatic deposits or withdrawals previously authorized by the owner and any automatic reinvestment of dividends or interest, to be considered as an indication of owner’s interest.

 

In our latest submission, we recommend removing the brackets and make this an acceptable indication of interest, as this is a common way owners interact with their property.

 

Life insurance proof of death & Death Master File search requirement
UPPO recommends that a “match” of owner information with the Social Security Death Master File should not equate proof of death, and the only trigger of abandonment should be when the policy is due and payable as prescribed by law and the policy terms.

 

Election to Take Payment
If a holder is unsuccessful in notifying an owner of their property, the holder is allowed to report and remit the property to the administrator before it’s considered abandoned. Though UPPO supports this, direct language should be added to this section to relieve the holder of any liabilities for any claims to the property.

 

Examination of records & interstate cooperation
UPPO recommends that additional provisions be added to the RUUPA, which would restrict a state’s ability to join an unclaimed property audit that has already commenced, and in addition add specific restrictions related to record sharing between jurisdictions, in concern for the confidentiality of the holder.

 

Estimation and retention of records
UPPO commissioned a review, by two statistical sampling experts, of the AICPA (recommended by UPPO) and MTC (recommended by NAUPA) statistical sampling methods. The experts have advised UPPO that a modified version of the MTC standards could provide sufficient levels of disciplines. 

 

In addition to the model, UPPO still recommends clear procedures and standards be developed for the use of estimation and statistical sampling to ensure transparency and fairness. This is an issue that will likely see continued dialogue between stakeholders and the drafting committee, and UPPO recommends the drafting committee create a work group with representatives from NAUPA and UPPO to review these recommendations and develop specific guidance.

 

Foreign transactions/property
With support from the principles of comity and the Supremacy Clause, the Due Process Clause, and the Foreign Commerce Clause of the U.S. Constitution, UPPO advocates that all foreign transactions/property is exempt from unclaimed property reporting. UPPO recommends Section 26 to be amended as the following to exclude all foreign address property:
[Section 26. Foreign Transactions

 

(a) Except as provided in subsection (b), this [act] does not apply to property held, due, and owing to a person whose last known address is in a foreign country or to property arising out of a foreign transaction., if the foreign country, or a subordinate governmental unit of the foreign country, has laws

which entitle it to take and hold unclaimed property of its citizens and residents which are comparable to the laws of this state.

 

(b) Property defined in subsection (a) above may be voluntarily turned over to this state, but only under the following circumstances: (i) the holder is in the process of liquidating its business, or (ii) other circumstances render the holder’s continued maintenance of the property infeasible, in the view of the holder, such that escheatment would serve the interests of preserving the property for eventual owner claims. If the property has been voluntarily turned over to this state by the holder pursuant to Section 5(4), the administrator in whose custody the property has been placed may deliver the property to the foreign country or subordinate government unit of the foreign country on receipt of a record from the other country or unit requesting its payment or delivery.]

To learn more about how UPPO is representing the holder community on the national reform stage, visit the UPPO Advocacy page.

 

Tags:  reform  Revise Uniform Unclaimed Property Act  ULC  unclaimed property 

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