Michigan Unclaimed Property Law: What Business Owners Need to Know
For Michigan companies, finders are not necessarily keepers. Almost any business with customers, clients, or employees can find itself in possession of unclaimed cash or property which rightfully belongs to someone else. Such assets remain the property of the person who left them behind, and the companies that hold them have legal obligations to report what they have and turn it over to the Michigan Department of Treasury.
What Is Unclaimed Property?
When the owner of any financial asset held by a third-party like a business or bank hasn’t had any contact with the company for an extended period, and the company has been unable to contact the owner despite their best efforts, that asset constitutes “unclaimed property” under Michigan law.
Typically, the owner of the money or property has seemingly disappeared and abandoned their asset – a former employee with unpaid wages or an uncashed check, the holder of a bank account or safe deposit box who hasn’t had any transactions for years, an unclaimed customer refund, a customer prepayment that was never used, or the beneficiary of a life insurance policy who cannot be located. Unclaimed property can consist of almost anything of value, with the notable exception of real estate.
The Michigan Unclaimed Property Act
Under Michigan’s Uniform Unclaimed Property Act, Public Act 29 of 1995, Michigan businesses and government entities must report and remit to the Michigan Department of Treasury any abandoned and unclaimed property they hold that belongs to:
- Owners whose last known address is in Michigan, or
- Owners whose last address is unknown.
Any company holding potential unclaimed property with a value over $50 must make reasonable efforts to contact the owner and establish activity through an online login, written correspondence, a withdrawal or deposit, or an update to personal information. These efforts to contact the property owner need to be made no less than 60 days and no more than 365 days before the property is turned over to the Department of Treasury.
When Is Property Considered Abandoned?
Michigan law establishes “dormant periods” for different types of property. Property is considered “abandoned” at the expiration of an applicable dormant period. The period starts with the last time the property owner had any contact with the holder and during which the owner takes no other actions related to the property.
Most unclaimed property in Michigan has a three (3) year dormant period, including:
- Checking and savings accounts
- Cashier’s, certified and registered checks
- Customer overpayments and refunds due
- Contents of safe deposit boxes
- Security deposits
- Escrow funds
- Insurance policy benefits or payments
A shorter, one-year dormant period applies to unclaimed wages, salary, payroll, and commissions. You can see a complete list of dormant periods, and lots of other detailed information about unclaimed property law in Michigan, in the Department of Treasury’s “Manual For Reporting Unclaimed Property.”
In October 2018, Michigan established a new online system which allows holders of unclaimed property to file reports and make payments electronically. Even companies that do not possess any unclaimed or abandoned property are, in the Department’s words, “strongly encouraged” to file a Zero/Negative Report to “establish a filing history and ensure your compliance with the Unclaimed Property Act.”
Failure to file and remote unclaimed property within the time period prescribed by law can result and fines, interest, and penalties.
Contact Us with Your Unclaimed Property Questions or Concerns
If you have questions or concerns about any unclaimed property in your company’s possession or need assistance with required due diligence or reporting, the business law attorneys at Kreis Enderle can help. Please contact Dan McGlinn at DMcGlinn@kehb.com or (269) 324-3000.