States first became the custodians of unclaimed money back in the 1960s or so. Their argument was that they were more trustworthy than businesses when it came to safeguarding citizens lost accounts.
Back then, the states would let dormant accounts sit there for a good long time —maybe ten years— before considering them unclaimed money and forcing banks and other financial firms to turn the money over to the state. But soon state legislators realized holding unclaimed money was a benefit to THEM, not just you. They deposited these millions or billions worth of unclaimed funds in interest bearing accounts and the STATE’s kept the interest. At first they used the interest just for good causes like education and crime fighting.
But then, like so many things, the original, pure purpose eroded. States started using the PRINCIPAL, not just the interest to pay for things. And they started using it to plug gaps in their general fund rather than just for special, select programs like education.
The states got addicted to these big pots of money and wanted more! They started shortening the number of years before dormant accounts were considered unclaimed. In California, for example, financial firms used to have to turn unclaimed accounts over after 10 years. Then the state shortened that to 7 years. Then to 3 years. There was even legislation trying to shorten the time period to 1 year! Ridiculous! If you didn’t interact with a financial account of yours for a year, would it really be lost or unclaimed? Unlikely. Luckily, that effort failed and California stayed with the 3-year plan.
Why am I telling you all this? SO you can keep an eye on your state AND on your accounts. Make sure to do something to keep them active at least once a year.