SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 2198 (Ting) - Unclaimed property: secure payment of claims

Bill Summary:

AB 2198 would allow the Controller to implement specified measures designed to streamline the secure payment of claims to unclaimed property.

Fiscal Impact:

To fully implement the changes authorized by this measure, the State Controller’s Office (SCO) reports it would cost $2.951 million in FY 2021-2022, $2.765 million in FY 2022-2023, $2.976 million in FY 2023-2024, $3.218 million in FY 2024-2025, and $3.494 in FY 2025-2026 and annually thereafter and 9.0 permanent additional staff. These figures include the necessary IT costs and fraud safeguards that SCO would need to put into place when shifting to the new electronic claim process and direct deposit functionality. (General Fund)

Background:

The Unclaimed Property Law requires banks, insurance companies, corporations, and certain other entities to report and submit their customers’ property to SCO when there has been no activity for a period of time, generally three years. Common types of unclaimed property are bank accounts, stocks, bonds, uncashed checks, insurance benefits, wages, and safe deposit box contents. From time to time, the Attorney General is required to bring a civil action in Sacramento County to have the court adjudge that title to unclaimed property has vested in the state and that the property has been actually abandoned or that the owner has died and there is no person entitled to it and effectuate permanent escheatment of the property to the state. When money in the Unclaimed Property Fund becomes permanently escheated to the state, it is transferred to the General Fund.

According to the analysis of this bill by the Senate Committee on Judiciary: “For property valued at $1,000 or less and belonging to a single owner, a claimant can submit a claim through the Controller’s website on a single form and receive the property in a few weeks. However, for all other properties a claimant must submit several documents by mail which can take several months to process.”

Proposed Law:

This bill would allow the Controller to do any of the following to streamline the secure payment of claims:

• Minimize the number of documents a claimant is required to submit for property under $5,000.
• Allow electronic submission of documentation to the Controller’s website for any claim deemed appropriate by the Controller.
• Authorize the direct deposit by electronic fund transfer for the payment of an approved claim.

Related Legislation:

AB 1637 (Smith, Ch. 320, Stats. 2019) permitted property reported to, and received by, the Controller in the name of a state or local agency, as defined, to be transferred by the Controller directly to that agency without the filing of a claim.

AB 2773 (Acosta, 2017-2018 Reg. Sess.) would have required the Controller to create a program for the voluntary disclosure of unclaimed property consistent with specified requirements. AB 2773 was never heard in the Assembly Committee on Judiciary.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: AB 2198 (Author:Ting)

Version: June 4, 2020

Hearing Date: July 30, 2020

Fiscal: Yes

Urgency: No

Consultant: AM

SUBJECT

Unclaimed property: secure payment of claims

DIGEST

This bill authorizes the Controller to implement additional measures designed to streamline secure payment of claims to claimants under the Unclaimed Property Law (UPL) by authorizing the Controller to minimize the number of documents a claimant is required to submit for property under $5,000, allow electronic submission of documentation through the Controller’s website on claims deemed appropriate by the Controller, and authorize the direct deposit of an approved claim by electronic fund transfer.

EXECUTIVE SUMMARY

The UPL establishes procedures for the state to hold, but not own, unclaimed property and provides a claims procedure to claim property held by the state. For property valued at $1,000 or less and belonging to a single owner, a claimant can submit a claim through the Controller’s website on a single form and receive the property in a few weeks. However, for all other properties a claimant must submit several documents by mail which can take several months to process. This bill seeks to authorize the Controller to implement additional measures in order to streamline the claims process under the UPL. There is no known support or opposition.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the UPL, provides that it is the intent of the Legislature that property owners be reunited with their property, and prohibits property received by the state under the UPL from permanently escheating to the state. (Code Civ. Proc. §§ 1500 et. seq.; § 1501.5(a) & (c).)
2. Requires banking and financial organizations, insurance companies, and other businesses that hold a customer’s property to transmit that property to the State Controller if the owner fails to engage in any account activity for a specified period of time, generally three years, and if the owner fails to take certain actions and respond to specified notices. (Code Civ. Proc. §§ 1510-1515.)
3. Provides a claims procedure for claiming property held by the state. (Code Civ. Proc. §§ 1540-1542)

This bill authorizes the Controller to minimize the number of documents a claimant is required to submit for property under $5,000, allow electronic submission of documentation through the Controller’s website on claims deemed appropriate by the Controller, and authorize the direct deposit of an approved claim by electronic fund transfer in order to streamline the secure payment of claims under the UPL.

COMMENTS

1. Stated need for the bill

The author writes:

AB 2198 is necessary to streamline the Unclaimed Property process so that Californians can more easily access their property. While the eClaims process has simplified many claims, not all claims can go through eClaims and the documentation requirements are overly burdensome, with all claims requiring at least six different types of documentation. The bill would streamline the process by requiring less documentation for claims, allowing for electronic submission of documentation to the Controller’s Office for all claims, and allowing for direct deposit of all claims.

2. Streamlining the claims process for recovering unclaimed property

As of January 2019, the State Controller’s Office (SCO) reported it holds 48 million properties worth an estimated $9.3 billion.^[1] In 2014, the SCO instituted an eClaims program where properties valued $1,000 or less and belonging to a single owner can be claimed through the SCO’s website by filling out an online form, which can be considered in minutes.^[2] For property over $1,000, claimants must submit at least six different documents through the mail, which can take months to process.^[3] A 2015 Legislative Analyst Office (LAO) report found that the amount of single owners reunited with their property almost tripled after instituting the eClaims process in 2014 when compared to the same time period in 2013.^[4] The LAO also found that “[r]equiring such extensive documentation at the outset of the process likely results in some potential claimants abandoning their paper claim because they find the process too time consuming” and that many times all the documentation required to be submitted was unnecessary.^[5] This bill seeks to streamline the current claims process under the UPL in order to get more property currently being held by the State back into the hands of the owners. The bill seeks to accomplish this goal by authorizing the Controller to do three things: (1) minimize the number of documents a claimant is required to submit for property under $5,000, (2) allow electronic submission of documentation through the Controller’s website on claims deemed appropriate by the Controller, and (3) authorize the direct deposit of an approved claim by electronic fund transfer.

SUPPORT

None known.

OPPOSITION

None known.

RELATED LEGISLATION

Pending Legislation:

None known.

Prior Legislation:

AB 1637 (Smith, Ch. 320, Stats. 2019) permitted property reported to, and received by, the Controller in the name of a state or local agency, as defined, to be transferred by the Controller directly to that agency without the filing of a claim.

AB 2773 (Acosta, 2018) would have required the Controller to create a program for the voluntary disclosure of unclaimed property consistent with specified requirements. The bill was never heard in the Assembly Judiciary Committee.

PRIOR VOTES:

Assembly Floor (Ayes 76, Noes 0)

Assembly Appropriations Committee (Ayes 18, Noes 0)

Assembly Judiciary Committee (Ayes 10, Noes 0)

**************

1. Find Your “Pot of Gold” at Calimit.ca.gov, Cal. State Controller’s Off., PR19:8 (Mar. 13, 2019) (available at https://sco.ca.gov/eo_pressrel_19941.html as of Jul. 7, 2020). ↑

2. Unclaimed Property: Rethinking the State’s Lost & Found Program, Leg. Ana. Off. (Feb. 10, 2015) at 13 (available at https://lao.ca.gov/reports/2015/finance/Unclaimed-Property/unclaimed-property-021015.aspx as of Jul. 2, 2020) ↑

3. Ibid. ↑

4. Id. at 25. ↑

5. Id. at 21. ↑

(Without Reference to File)

ASSEMBLY THIRD READING

ATR Bill Id:AB 2198

Author:(Ting)

As Amended Ver:June 4, 2020

Majority vote

SUMMARY:

Authorizes the State Controller to streamline the claims process and the payment of claims under the Unclaimed Property Law (UPL).

Major Provisions

1. Authorizes the Controller to do any of the following to streamline the secure payment of UPL claims:
   1. Minimize the number of documents a claimant is required submit in order to claim property worth $5,000 or less.
   2. Allow electronic submission of documents to its website for any claims the Controller deems appropriate.
   3. Provide for direct deposit by electronic funds transfer of payment of an approved claim.

COMMENTS:

Five years ago, the Legislative Analyst's Office found that the state escheats, or takes temporary title in, $10 in unclaimed property for every $4 that it successfully reunites with its proper owner. (See Legislative Analyst's Office, "Unclaimed Property: Rethinking the State's Lost & Found Program" (February 15, 2015) at 3, available at https://lao.ca.gov/reports/2015/finance/Unclaimed-Property/unclaimed-property-021015.pdf.) (Legislative Analyst's Office (LAO) Report). The net result was that "[a]s of the end of 2013-14, the state had 28.4 million escheated properties [collectively] valued at $7.2 billion." (Ibid. at p. 5.)

Those numbers have only increased in the intervening years. As of March 2019, the state was in possession of 48 million escheated properties collectively valued at $9.3 billion. (State Controller's Office, "Find Your 'Pot of Gold' at Claimit.ca.gov" (Mar. 13, 2019), available at https://sco.ca.gov/eo_pressrel_19941.html.)

Reducing documentation requirements. Currently, a property owner may be able to file their claim electronically, with no need to submit paper documents, through the State Controller's existing eClaim system. The threshold eligibility requirements for filing an eClaim is that the claimant be identified as the property's sole owner in the system and the property's value be less than $5,000. However, if one cannot file an eClaim, the State Controller's Office requires a significant number of documents to substantiate one's claim. These include:

1. A signed claim form
2. Notarization of the claim form, if one's claim is for a)$1,000 or more, b)safe deposit box contents, or c) securities
3. A copy of a driver's license or other state-issued photo identification
4. If one's name has changed, documentation verifying the name change, such as a marriage certificate or pertinent court document
5. Proof of Social Security Number
6. Proof of current mailing address
7. Proof that one received mail at the reported address associated with the property, if different from one's current mailing address
8. Proof of ownership, if there is no reported address associated with the property

(See "Property Owner Claim Filing Instructions and Requested Documentation," available at http://www.sco.ca.gov/Files-UPD/guide_claim_owner.pdf.)

This bill would attempt to reduce the documentation burden by authorizing the Controller to "[m]inimize the number of documents a claimant is required to submit for property under five thousand dollars ($5,000)."

Facilitating electronic paperwork submissions. If one is unable to submit an eClaim for one's property, the State Controller requires that one submit a claim form and any supporting documents in paper form via United States mail. The LAO identified this requirement as an impediment to returning property to its owner, writing:

Another way to lessen the administrative burden on claimants would be to allow them to scan and submit supporting documentation online. Users could even take pictures of documents with their phones, as many banks now allow their customers to do when depositing checks. As seen with the eClaim program, efforts to make the claims process easier can result in more property reunited with owners. (LAO Report at 25.)

This bill would implement this recommendation by authorizing the Controller to "[a]llow electronic submission of documentation to the Controller's internet website for any claim deemed appropriate by the Controller."

Authorizing direct deposit. Finally, this bill could speed up the process of returning unclaimed funds to property owners by making clear that the Controller can "[a]uthorize the direct deposit by electronic fund transfer for the payment of an approved claim."

According to the Author:

The state's current unclaimed property program began in 1959 and has undergone many changes since then. Unfortunately, millions of claims remain unclaimed and many Californians find the current process to be overly burdensome.

AB 2198 is necessary to streamline the Unclaimed Property process so that Californians can more easily access their property. While the eClaims process has simplified many claims, not all claims can go through eClaims and the documentation requirements are overly burdensome, with all claims requiring at least six different types of documentation. As [] amended, the bill would streamline the process.

Arguments in Support:

None on file

Arguments in Opposition:

None on file

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, costs (General Fund) in the low hundreds of thousands of dollars to consider options for streamlining processes pertaining to requests of unclaimed property.

VOTES:

ASM JUDICIARY: 10-0-1

YES: Mark Stone, Gallagher, Chau, Chiu, Gonzalez, Holden, Kiley, Maienschein, Obernolte, Reyes

ABS, ABST OR NV: Kalra

ASM APPROPRIATIONS: 18-0-0

YES: Gonzalez, Bigelow, Bauer-Kahan, Bloom, Bonta, Calderon, Carrillo, Chau, Megan Dahle, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Petrie-Norris, McCarty, Robert Rivas, Voepel

UPDATED:

VERSION: June 4, 2020

CONSULTANT: Jith Meganathan / JUD. / (916) 319-2334 FN: 0002895

Date of Hearing: June 2, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2198

Author:(Ting) – As Amended Ver:May 4, 2020

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the State Controller’s Office (SCO), by January 1, 2022, to transfer property worth $5,000 or less, if the SCO can identify the owner without the submission of claim documents.

FISCAL EFFECT:

Costs (GF) to the SCO of $11 million dollars in FY 2020-2021, $4.7 million dollars in FY 2021-2022, and approximately $5 million dollars annually thereafter in additional staff and technology infrastructure to automatically transfer property to owners if the amount is $5,000 or less. SCO notes it would need to create an automated system that matches unclaimed property with its rightful owner, while ensuring sufficient identity verification and fraud safeguards are in place.

COMMENTS:

1. Purpose. According to author:

AB 2198 is necessary to streamline the Unclaimed Property process so that Californians can more easily access their property. While the eClaims process has simplified many claims, not all claims can go through eClaims and the documentation requirements are overly burdensome, with all claims requiring at least six different types of documentation.

1. Unclaimed Property Law. The objectives of California’s Unclaimed Property Law (UPL) are to protect unknown property owners by locating them and restoring their property to them. Unclaimed property includes: property that is unclaimed, abandoned, vested or distributed to the state; property that will become unclaimed, abandoned, vested or distributed to the state under any provision of law; and property the possession of which the state is or will become entitled, if the property is not claimed by the person entitled to possession within a statutory period of time.
   
   In its 2015 report, the Legislative Analyst’s Office (LAO) made a series of recommendations to ensure that the state reunites more unclaimed property with owners. This bill would implement some of those recommendations. LAO noted that the current documentation requirements for paper claims are excessive in some cases. One option to return more property would be to lower the documentation required at the outset of the paper claims process, particularly for claims under $5,000.
2. SCO Obligations. The SCO is responsible for safeguarding lost and forgotten property turned over to the state (e.g., bank accounts, uncashed checks, insurance benefits, wages, stocks, bonds and safe deposit box contents) until claimed by the rightful owners. Possible owners ordinarily search an online database of properties and, if someone believes they own the property, submit a claim for review. SCO reviews filed claims and supporting documentation of ownership to determine if someone is the actual property owner.
   
   SCO has several concerns with this bill including the possible abrogation of its constitutional responsibility to review claims submitted to SCO before transferring property to owners. Additionally, SCO has a backlog of 50 million unclaimed properties, approximately 35 million of which may be eligible for automatic transfer pursuant to the terms of this bill. This is a substantial increase in workload given that the average claim is for $400 or less and this bill requires possible automatic transfer of property worth of $5000 or less. SCO estimates it has approximately 7 million properties with an identifiable owner and half are likely no longer living. SCO also points out that automatic payments are more likely to result in fraud. SCO pays a fee to a third party vendor to verify identification when it receives a claim. In order to automatically transfer properties, SCO estimates verification costs will likely increase by $1 million dollars to $3 million dollars annually. Even postage to mail out properties automatically may be as high as $300,000 annually until all properties eligible for automatic payment are distributed.
3. Related Legislation.
   1. AB 1637 (Smith) Chapter. 320, Statutes of 2019, authorized the Controller to transfer property reported to the state under the UPL in the name of a local agency or state agency directly to that agency without the agency needing to file a claim, and provides that existing immunity from suit under the UPL also applies to the transfer of this property.
   2. AB 2332 (Kalra) establishes procedures for when and how preneed funeral arrangements that are not claimed upon the beneficiary’s death should transfer or escheat to the state under the UPL. AB 2332 is pending in this committee.

Analysis Prepared by: Kimberly Horiuchi / APPR. / (916) 319-2081

Date of Hearing: May 11, 2020

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 2198

Author:(Ting) – As Amended Ver:May 4, 2020

PROPOSED CONSENT

SUBJECT: UNCLAIMED PROPERTY

KEY ISSUE: SHOULD THE STATE CONTROLLER STREAMLINE THE CLAIMS PROCESS FOR UNCLAIMED PROPERTY BY AUTOMATICALLY RETURNING PROPERTY WORTH LESS THAN $5,000 TO OWNERS THAT IT IS ABLE TO IDENTIFY, MINIMIZING REQUIRED DOCUMENTATION TO SUBMIT CLAIMS, AND FACILITATING ONLINE SUBMISSIONS OF CLAIMS AND SUPPORTING DOCUMENTATION?

SYNOPSIS

This author-sponsored bill aims to simplify the process for reuniting unclaimed property with its rightful owners. It does so by directing the State Controller’s Office to make four changes to how it handles unclaimed property, and claims for that property, under the Unclaimed Property Law (UPL):

1. Automatically transfer any unclaimed property valued at $5,000 or less if the Controller can identify its owner;
2. Minimize documentation requirements required to claim property valued at $5,000 or less;
3. Allow online claims for property valued at $10,000 or less; and
4. Allow supporting documentation for all property claims to be submitted electronically, rather than in paper form.

The bill would provide the Controller until January 1, 2022 to make these changes. These changes would implement recommendations made by the Legislative Analyst’s Office in a 2015 report detailing the substantial, and growing, amount of unclaimed property in the state’s possession. There is no registered opposition to this bill.

SUMMARY: Requires the State Controller to streamline the claims process and the payment of claims under the Unclaimed Property Law. Specifically, this bill:

1. Requires that if the Controller can identify the owner of property worth $5,000 or less without the submission of claim documents, then the Controller must transfer that property to that owner.
2. Mandates that the Controller minimize the number of documents it requires a claimant to submit in order to claim property worth $5,000 or less.
3. Requires the Controller to allow claims to be submitted online in order to claim property worth $10,000 or less.
4. Directs the Controller to allow electronic submission of documents to its website for all claims.
5. Requires that all four of the preceding steps be implemented by January 1, 2022.

EXISTING LAW:

1. Establishes the Unclaimed Property Law. (Code of Civil Procedure Sections 1500-1582. Unless stated otherwise, all further statutory references are to the Code of Civil Procedure.)
2. Declares the Legislature’s intention, in the UPL, that property owners be reunited with their property and adopts an expansive notification program that provides for all of the following:
   1. Notification by the state to all owners of unclaimed property prior to escheatment;
   2. An expansive post-escheatment policy that takes action to identify the owners of unclaimed property; and
   3. A waiting period of not less than seven years from delivery of property to the state prior to disposal of any unclaimed property deemed to have no commercial value. (Section 1501.5 (c).)
3. Establishes the baseline conditions for intangible personal property to escheat to the state from its holder, and provides specific requirements for when banking, financial, insurance, and other businesses or entities that hold another’s property—whether in accounts, insurance policies, annuities, or safe deposit boxes, or other instruments—must transmit that property to the State Controller. Escheatment typically occurs if the owner fails to engage in any activity for a specified period of time (usually three years), and if the owner fails to respond to legally-required notices. (Sections 1510-1521.)
4. Defines an “owner,” for purposes of a claim, to be the person who had legal rights to the property before its escheatment, that person’s heirs or estate representative, that person’s guardian or conservator, or a public administrator who has taken possession or control of an estate pursuant to designated provisions of the Probate Code. (Section 1540 (d).)
5. Permits a person who claims to be the owner of property delivered to the Controller under the UPL to file a claim for the property or the net proceeds of any sale of the property. (Section 1540 (a).)
6. Provides that only an owner, as defined in (4), may file a claim for unclaimed property with the Controller. (Section 1540 (d).)
7. Mandates that the claim be filed on a form prescribed by the Controller and be verified by the claimant. (Section 1540 (a).)
8. Provides that the Controller must consider each claim within 180 days of its filing to determine if the claimant is the owner. Permits the Controller, in making this determination, to hold a hearing and receive evidence. (Section 1540 (b).)
9. Requires the Controller to provide a written explanation to the claimant if it denies the claim, whether in whole or in part. (Ibid.)
10. Calls on the Controller to hold a public hearing, and thereafter adopt guidelines and forms that provide specific instructions to assist owners in filing claims. (Section 1540 (e).)
11. Allows any person aggrieved by a decision of the Controller to bring an action, as specified. (Section 1541.)
12. Incorporates implementing regulations promulgated by the State Controller’s Office. (Cal. Code Regs., title 10, chapter 7.)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: Five years ago, the Legislative Analyst’s Office found that the state escheats, or takes temporary title in, $10 in unclaimed property for every $4 that it successfully reunites with its proper owner. (See Legislative Analyst’s Office, “Unclaimed Property: Rethinking the State’s Lost & Found Program” (Feb. 15, 2015) at 3, available at https://lao.ca.gov/reports/2015/finance/Unclaimed-Property/unclaimed-property-021015.pdf) (LAO Report). The net result was that “[a]s of the end of 2013-14, the state had 28.4 million escheated properties [collectively] valued at $7.2 billion.” (Ibid. at p. 5.)

Those numbers have only increased in the intervening years. As of March 2019, the state was in possession of 48 million escheated properties collectively valued at $9.3 billion. (State Controller’s Office, “Find Your ‘Pot of Gold’ at Claimit.ca.gov” (Mar. 13, 2019), available at https://sco.ca.gov/eo_pressrel_19941.html.)

The author writes:

The state’s current unclaimed property program began in 1959 and has undergone many changes since then. Unfortunately, millions of claims remain unclaimed and many Californians find the current process to be overly burdensome.

AB 2198 is necessary to streamline the Unclaimed Property process so that Californians can more easily access their property. While the eClaims process has simplified many claims, not all claims can go through eClaims and the documentation requirements are overly burdensome, with all claims requiring at least six different types of documentation. As proposed to be amended, the bill would streamline the process by allowing the Controller to transfer the property by identifying property owners through tax payer records, require less documentation for claims under $5,000, allow for electronic submission of documentation to the Controller’s Office for all claims, and increasing the eClaims threshold to $10,000.

In its 2015 report, the LAO made a series of recommendations to ensure that the state reunites more unclaimed property with its owner. This bill would implement four of those recommendations, as described below.

Transferring property automatically to identifiable owners. The bill would require that for any property worth $5,000 or less, if the Controller can identify the owner of that property, then the Controller transfer that property to the owner. The LAO Report identified two potential mechanisms for accomplishing this goal. First, the LAO noted:

[L]inking California’s unclaimed property program to its tax administration system could make sense…. SCO [i.e., the State Controller’s Office] could send potential matches to state tax agencies for cross checking with those agencies’ records of tax filers. (SCO already coordinates with FTB for pre escheat notices.) When a tax agency identifies a match, it could augment the tax filer’s refund or SCO could mail a check to the tax filer at the address the filer identified in their tax return. (LAO Report at 24.)

Second, the LAO noted:

SCO uses a system to detect fraud in the unclaimed property program. The system culls public records—for example, postal service change of address firms, property tax records, and phone books—to gather current and prior addresses, phone numbers, and other identifying information about individuals. […] SCO currently uses this fraud system for locating efforts on a small scale. These efforts could be expanded to find new addresses and other contact information for owners and notify them of their unclaimed property. (Ibid. at 25.)

This bill does not prescribe the means by which the State Controller is to identify or transfer unclaimed property to its owner. Either of the methods described by the LAO would build on existing processes already employed by the Controller, and presumably reduce the risk of property being returned to the incorrect person.

Facilitating online claims submissions. Today, a property owner may be eligible to file their claim electronically, with no need to submit paper documents, through the State Controller’s existing eClaim system. The threshold eligibility requirements for filing an eClaim is that the claimant be identified as the property’s sole owner in the system and the property’s value be less than $5,000.

This bill would double the threshold for an eClaim filing to $10,000. This is in keeping with the LAO Report, which noted that “increasing the threshold to $10,000 [from its then-maximum of $1,000] could nearly double the value of properties eligible for eClaim.” (LAO Report at 25.)

Reducing documentation requirements. If one is not fortunate enough to be able to file an eClaim, the State Controller’s Office requires a byzantine number of documents to substantiate a claim. These include:

• A signed claim form
• Notarization of the claim form, if one’s claim is for (a) $1,000 or more, (b) safe deposit box contents, or (c) securities
• A copy of a driver’s license or other state-issued photo identification
• If one’s name has changed, documentation verifying the name change, such as a marriage certificate or pertinent court document
• Proof of Social Security Number
• Proof of current mailing address
• Proof that one received mail at the reported address associated with the property, if different from one’s current mailing address
• Proof of ownership, if there is no reported address associated with the property

(See “Property Owner Claim Filing Instructions and Requested Documentation,” available at http://www.sco.ca.gov/Files-UPD/guide_claim_owner.pdf.)

These requirements appear unchanged since the LAO Report was issued. At the time, the LAO recommended as follows:

The current documentation requirements for paper claims are excessive in some cases. One option to return more property would be to lower the documentation required at the outset of the paper claims process. This would (1) make the process significantly easier for many claimants, (2) increase the number of claims, and (3) increase the amount of unclaimed property reunited with owners. (LAO Report at 25.)

This bill would implement the LAO’s recommendation by requiring the Controller to “[m]inimize the number of documents a claimant is required to submit for property under five thousand dollars ($5,000).” Committee staff notes that the term “minimize” is vague and susceptible to multiple interpretations. In fact, the Controller could claim that it already complies with this mandate because the number of documents it requires cannot be further minimized. As this bill moves through the legislative process, the author may wish to consider whether this requirement can be framed in more precise terms.

Ensuring electronic paperwork submissions. If one is unable to submit an eClaim for one’s property, the State Controller requires that one submit a claim form and any supporting documents in paper form via U.S. mail. The LAO identified this requirement as an impediment to returning property to its owner, writing:

Another way to lessen the administrative burden on claimants would be to allow them to scan and submit supporting documentation online. Users could even take pictures of documents with their phones, as many banks now allow their customers to do when depositing checks. As seen with the eClaim program, efforts to make the claims process easier can result in more property reunited with owners. (LAO Report at 25.)

This bill would implement this recommendation by directing the Controller to “[a]llow electronic submission of documentation to [its] internet website for all claims.”

Other Pending or Past Related Legislation: AB 2332 (Kalra, 2020) would establish procedures for when and how preneed funeral arrangements that are not claimed upon the beneficiary’s death should escheat to the state under the UPL. It is also scheduled to be heard by this Committee.

AB 1637 (Smith, Chap. 320, Stats. 2019) authorized the Controller to transfer property reported to the state under the UPL in the name of a local agency or state agency directly to that agency without the agency needing to file a claim, and provides that existing immunity from suit under the UPL also applies to the transfer of this property.

AB 2773 (Acosta, 2018) would have required the Controller to create a program for holders of unclaimed property to voluntarily disclose the existence of this property to the state. No interest and penalties would have been charged to holders who were accepted into the program, completed the voluntary disclosures in good faith, and acted consistently with program requirements. The bill was withdrawn by the author before its first hearing in this Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Jith Meganathan / JUD. / (916) 319-2334