St. Thomas attorney Tom Bolt, Chairman of the Virgin Islands Uniform Law Commission testified before the 27th Legislature's Committee on Rules and the Judiciary on Wednesday regarding Bill 27-0161, "The Virgin Islands Unclaimed Property Act". Bolt noted that the legislation which is sponsored by Senator Terrence "Positive" Nelson, Chair of the Committee on Finance is revenue positive. "The Territory will generate funds from this bill." Bolt noted.
"What is unclaimed property?" Bolt retorically asked the Committee. "It is bank accounts, insurance proceeds, old traveler's checks, stock holdings, and even the proceeds from winning parimutuel tickets. What unites these different kinds of property is the fact that the person to whom they are owed has never come forward to collect them and cannot be readily found. If the owner does not come forward or is not found, the holder gets to keep the property, and worse, may dissipate the property through service charges and the like." Bolt said
This problem is not new. The Uniform Disposition of Unclaimed Property Act was promulgated by the Uniform Law Commissioners (ULC) in 1954 and adopted in 32 states. The ULC then went on to promulgate the Uniform Unclaimed Property Act in 1981, which was enacted in 27 states including the United States Virgin Islands.
These acts were drafted to prevent people, ordinary people for the most part, from losing their rights to property that is justifiably theirs. It is theirs because they earned it, inherited it, or were given it. Those entities and institutions that hold property are its custodians, not its owners. They benefit at the expense of others if there is no proper statute governing the custody of unclaimed property.
The institutions that hold property are debtors. The real owners are the creditors. Safeguarding unclaimed property is a matter of protecting creditor's rights. If there is no unclaimed property legislation, debtors receive an unearned, undeserved windfall.
To better protect property owners, the ULC has once again visited this subject. The Uniform Unclaimed Property Act (UUPA) was revised in 1995. This new act will streamline the process by which states and holders deal with abandoned property.
Bolt explained to members of the Rules and Judiciary Committee that they should adopt the new Uniform Unclaimed Property Act of 1995 for a variety of reasons including:
REVENUE. The Territory is the custodian for unclaimed property under the UUPA (1995). Unclaimed property, as long as the owner does not claim it, becomes available to the states and territories as a source of revenue.
UNCLAIMED PROPERTY IS PRESERVED FOR OWNERS. The Government of the Virgin Islands benefits from unclaimed property only because it acts as the perpetual custodian for the real owners. If at any time a rightful owner comes forward to claim property, the Territory must transfer it to the rightful owner.
JURISDICTIONAL CONFLICTS. UUPA (1995) conforms to the latest U.S. Supreme Court cases on jurisdiction over unclaimed property. Consistent with the Supreme Court's decisions in Texas v. New Jersey and Delaware v. New York, UUPA (1995) clarifies that unclaimed intangible property is payable to the jurisdiction of the owner's last known address. In those instances where that information is unknown, or the jurisdiction of the owner's last known address does not assert a claim to the property, it is payable to the jurisdiction of the holder.
SIMPLIFICATION. The new act clarifies the definition of intangible property, and removes ambiguities over the meaning of "last known address." "Last known address" is no longer defined in the act. Instead, the sections dealing with the jurisdictional rules are rewritten so that they define, individually, the rules of the states or territories' priorities of taking.
PERIODS OF ABANDONMENT SHORTENED. The periods of time after which abandonment will be presumed have been reduced in some instances: corporate stock, from seven to five years; gift certificates, from five to three years. Certain life insurance obligations had five-year and two-year periods of abandonment; these have been unified at three years. UUPA provides in a single, unified section for all the various periods of abandonment that were separately stated in several sections of the 1981 act.
ENFORCEMENT. The UUPA (1995) improves collection of unclaimed property over the previous acts. Reporting procedures are improved so that administrators can keep better track of property that becomes unclaimed property. It also increases the penalties for non-compliance and adds rules of confidentiality.
INTERSTATE COOPERATION. The UUPA (1995) provides enacting juridictions with the power and procedures to cooperate with each other in the administration of unclaimed property. Cooperation among states and territories is essential if abandoned property programs are to be efficiently administered.
UNIFORMITY. Since 1981, states and territories have become more aware of the benefits to be derived from the collection of unclaimed property, and have thus enacted numerous changes to their unclaimed property laws to make it easier to enhance their collections. Some amendments have advanced the time at which unclaimed property is presumed to be abandoned, and other amendments have sought to reach property that was not clearly classified as presumptively abandoned under existing legislation. The result has been to create a serious lack of uniformity among the states and territories' laws, a situation objected to by those jurisdictions and holders alike.
Concluding his remarks, Attorney Bolt said that "because of the interstate character of abandoned property law, it is clear that Virgin Islands should adopt the Uniform Unclaimed Property Act (1995)". On motion of Senator Shaun Michael Malone, the Committee unanimously sent the bill to the full body for consideration in their March 18th Regular Session.