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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Developing a Strategy for Effective Asset Recovery

Posted By Administration, Wednesday, February 6, 2019

Unclaimed property compliance is a necessary, but expensive responsibility for many companies. However, unclaimed property professionals can help offset some of the costs associated with their role by taking on the holder. Seeking and recovering property owed to the company can turn an area that is normally a cost center into a profit center. 

 

Finding and claiming unclaimed property requires a well-planned and systematic effort. Some states publish unclaimed items only when they’re over a certain age or dollar amount, but these thresholds aren’t consistent from state to state. In addition, searchable data excludes a substantial amount of property held by cities, counties and other entities.

 

The complexities associated with a company’s structure and history compound these challenges. Property may not be listed only under the company’s current name. There may be property attached to numerous subsidiaries and other entities with different names, plus additional companies, subsidiaries and entities tied to mergers and acquisitions. Don’t forget about alternate spellings (or misspellings) and acronyms. 

 

Once property is located, recovering it can also prove challenging. Demonstrating that the property rightfully belongs to your company and that you have the authority to claim it carries another set of roadblocks. 

 

So, how should an unclaimed property professional approach this complicated task? Following are a few tips for making the process less cumbersome. 

 

Understand your company 

Having a comprehensive knowledge of your company’s business activities, holdings and history can help clarify the types of unclaimed property it is likely to have. Similarly, knowing the company’s legal names, DBAs, and merger and acquisition history is essential to conducting complete and effective unclaimed property searches. 

 

"To maximize recoveries, you must know your company,” said Kim Sawyer, consultant for PricewaterhouseCoopers. “Understand your M&A history, learn your corporate structure, identify all fictitious and previous names, appreciate your primary business lines and ascertain significant physical locations. Based on that information, create search and source lists. A search list consists of legal entities and fictitious name under which unclaimed property may be found. A source list narrows down where you are going to do these searches, based on clients, vendors and agencies that may owe you a refund.”

 

Build a reference library

Unclaimed property claims frequently require documents that verify the company’s relationship to its subsidiaries and predecessor companies. Maintaining a library of these documents makes the process easier and more efficient. The library should include: merger and acquisition filings, name change and fictitious name filings, an Internal Revenue Service letter containing the tax ID number, and a list of current and past real estate holdings.

 

Typically, the person signing for the unclaimed property must demonstrate the authority to do so. Depending on the holder or agency, proof may be as simple as company bylaws, but in many cases a secretary certificate or other specific documentation will be required. The signatory usually needs to provide a driver’s license for identity verification as well. 

 

“If you’re searching for a predecessor company that no longer exists, you’ll need documentation that the company was 100 percent owned by your company before it dissolved and, in some cases, you may have to legally revive the company before a source may pay out a claim,” Sawyer said. “When dealing with acquisitions, you’ll need to show documentation that your company is entitled to recover property that exists under the predecessor company’s name. Maintain these documents in an organized fashion because you’ll have to access them repeatedly.”

 

Get organized

A well-designed unclaimed property recovery system includes a thorough tracking document or database containing detailed, up-to-date information about searches, data requests and submitted claims. It should include property IDs, amounts, owner names and addresses, contact names and phone numbers, and scheduled follow-up dates.

 

Exercise care with third parties

If your company decides to seek assistance from a third-party specialist, perform due diligence to ensure you’re dealing with a reputable firm. Make sure you have a detailed explanation of the fee structure before signing any agreements. 

 

“It’s important to conduct background checks when considering a relationship with a third-party vendor,” said Donna Greenhalgh, unclaimed property supervisor with AT&T. “Seeking recommendations and feedback from other departments within your company may also be beneficial, since they may be using vendors that perform services for other purposes, such as tax services or audit support. Checking to see if they are UPPO members is also another worthwhile step.” 

 

Join UPPO for an in-depth look at recovering unclaimed property during the Recovering Assets for Your Company webinar at 1 p.m. EST on Feb. 13. Presenters Kim Sawyer and Donna Greenhalgh will provide insight and practical tips to help unclaimed property professionals find and recovery assets for their companies. Register today

Tags:  asset recovery 

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Can outsourcing recovery efforts benefit your company?

Posted By David Knott, managing director, United Asset Recovery , Monday, January 16, 2017

Compliance with unclaimed property regulations is a big enough project in and of itself. Holders don’t always have the time or resources to hunt down and recover their own company’s abandoned property. However, being able to show that unclaimed property isn’t just a compliance function but can also bring in “revenue” could help your pitch in getting that new software upgrade, hiring additional staff, etc. With time and resources low, outsourcing large-scale property recovery in which the vendor has the responsibility and your company’s authorization to pursue and recover as much unclaimed property that your company is rightfully entitled to as possible, may be a good option.

 

While many companies have the best of intentions when it comes to recovering their own unclaimed funds, more often than not, recovery is put on the backburner for years on end while higher priorities take precedence.

 

There are downsides to long delays in recovering unclaimed funds. One of the downsides is that as years pass, locating supporting documents to prove association with certain addresses, certain venders, and other relationships becomes increasingly difficult. The tougher it becomes to find those supporting documents, the more difficult approval and payment of those claims become. Most of our clients have over the years, undergone one or more major upgrades to their information technology systems. Former systems containing historical accounting or vendor information either become difficult and time consuming to access, or not accessible at all and so goes finding an old invoice or payment to a specific vendor. If a state is demanding proof of a specific relationship or address and it cannot be provided, the asset in question will remain with the state.

 

Another down side is the risk of loss by fraud. If you work for a large company, it is likely that from time to time large single assets will surface that your company is entitled to. These large assets are prime targets of fraudsters for obvious reasons. By consistently recovering your company’s unclaimed funds, you reduce the risk of loss by fraud.

 

Still another down side is the loss of knowledge specific to your company’s unclaimed property due to unexpected turnover of a key unclaimed property staff member. A staff member who has been with your company for many years will likely have deeper knowledge of your company’s history than a new employee and would therefore be more likely to have knowledge to locate, track, and recover less obvious assets that your company is entitled to.

 

Three immediate benefits of outsourcing recovery are:

 

  • That the recovery project is put on the front burner and receives full attention now rather than later;
  • Assets are located and removed from the universe of properties that could fall prey to fraud and;
  • Continuity and continuation of your recovery program following turnover of key unclaimed property staff.

The benefits don’t end there, however.

 

An upside to outsourcing is that recovery vendors work on a contingency fee basis. This can be beneficial to your company because:


1) Your vendor is motivated to recover as much unclaimed property for your company as possible.

2) Your costs are proportional to the value of unclaimed property recovered during any given period. After a year of outsourcing, if the volume of available assets drops dramatically, your commission cost to the vendor drops in proportion. For example, if your vendor recovers a large number of assets totaling $250,000 during the first sweep of assets on a 10 percent commission, they would earn $25,000. If the following year, recoveries drop to $65,000, the vendors commission drops accordingly to $6,500.

 

Finally, you can use the time you save from outsourcing to focus on compliance and thus avoid errors that end up costing your company money or, you can use the time saved to focus on other matters of higher priority. With the time pressures we all seem to face in business today, the value of time savings may be the benefit that you value and appreciate most.

 

 

Tags:  asset recovery  unclaimed property  vendor 

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Turn a cost-center into a profit center with asset recovery

Posted By Administration, Tuesday, November 22, 2016

For many companies, unclaimed property represents a cost center. It’s a necessary function that can be labor-intensive to administer and, thus, costly. However, offsetting the expenses associated with unclaimed property is possible, by seeking unclaimed property that belongs to the company.

 

“There is more than $100 billion out there for companies to claim,” says Kim Sawyer, president and general counsel for The Locator Service Group. “That money is not just the $41 billion plus held by state abandoned property offices, but there are billions more held by cities, counties, federal agencies, courts and foreign government agencies.”

 

Recovering the company’s piece of that $100 billion pie is certainly appealing and beneficial, but doing so often requires overcoming a lot of challenges. Simply tracking down the property owed to a company is the first major challenge. Only a small percentage of property is posted online. Some states publish items only when they’re over a certain age or dollar amount, but these thresholds aren’t consistent from state to state. 

 

In addition to the online search limitations imposed by the states, the data that is searchable likely excludes a substantial amount of property held by cities, counties and other entities.

 

Because states and other entities often choose not to publish the actual value of the property they hold, companies may spend substantial time pursuing a claim, only to find out its value is miniscule.

 

Companies attempting to recover assets may also run into a spectrum of challenging scenarios that vary by property type and state, including:

  • Some states require indemnity bonds on the property that has been escheated.
  • Many states send escheated shares that are being claimed back to the transfer agent. To get paid by the transfer agent, the property owner needs a medallion signature guarantee from a financial institution. In large companies, the people who are able to acquire such a guarantee are at very high levels.
  • An increasing number of states are requiring holder verification. Property owners have to prove they had a business relationship with the holder and that no other owners are associated with the property.
  • Some entities require a corporate seal. However, a lot of corporations today are LLCs that don’t have a corporate seal.
  • Some states require that the person claiming the property is an authorized signatory for that actual company—not the parent company. When recovery is centralized, that can present a challenge.

“Something that is seemingly so easy, isn’t really easy at all,” Sawyer says.

 

So how can companies recover their funds effectively? At a minimum, they should contact the state where they are located or have a significant presence and ask them to search on their behalf.

 

“If you’re a large company and you don’t provide an overwhelming list of names—just five or six subsidiaries with the largest presence in the state—they may be willing to do that for you,” Sawyer says. “Frame the request in terms of, ‘We escheat a lot of property to your state; I would greatly appreciate you helping us with this request.’ They often will help if the request isn’t overly cumbersome.”

 

Submit similar requests to cities and counties where the company is located, as they too may be able to assist.

 

Additional steps that can make the recovery process easier include:

  • Create a corporate library: Unclaimed property claims frequently require documents that verify the company’s relationship to its subsidiaries and predecessor companies. Maintaining a library of these documents makes the process easier and more efficient. The library should include: merger and acquisition filings, name change and fictitious name filings, an Internal Revenue Service letter containing the tax ID number, and a list of current and past real estate holdings.
  • Develop and maintain relationships: Government agency recovery personnel can be great assets. Maintain a database of employees who have proven helpful at the city, county and state levels so you can call on them again as needed.
  • Annually review filings: Put a process in place to review refund filings to make sure they have been received. The largest property claims are often tax refunds.

Companies may choose to retain third-party specialists to assist with recovery. Proper vetting of these companies is essential.

 

“If you hire a third party on a contingency fee basis, it can be a win-win,” Sawyer says. “However, make sure your company’s interests are aligned with the third party." Some third party recovery companies only work in the state or states they are licensed to do business in and will not have the ability to search for your corporate funds nationwide. If your company is looking for a nationwide search of their unclaimed funds this would be a question you should ask up front.

 

Turning unclaimed property from a cost center into a profit center is an appealing prospect, but the challenges can be daunting. By putting systems and processes in place, however, companies can begin to reap the benefits of recovering assets that are rightfully theirs.

 

To learn more about recovering unclaimed property, join Sawyer and Nora O’Connor, NCM Solutions, as they lead the Take it or Leave It session at the 2017 UPPO Annual Conference. The event will also include an Owner Representative/Asset Recovery Industry Breakout session to help professionals exchange information and network with fellow attendees with an interest in this topic.

 

UPPO members are also encouraged to designate that they do asset recovery as part their job. If you recover property for your company or for owners, email us to tell us you do, and we’ll make a note on your profile. 

Tags:  asset recovery  unclaimed property 

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