Let’s talk about our find yours topic for today: the importance of finding any unclaimed stocks or bonds before the government sells them off.
Here’s why this is crucial: one, many of us don’t keep close track of the investments we buy because we’ve been told to hold them for the long haul, so we just sort of let them stew and hope they go up. This is incredibly common. It’s also common for investments to go missing when they were given to you or your children by a relative. Problem is, if you don’t at least keep in annual touch with the bank or brokerage firm where those investments are held, they could get reported as unclaimed property.
If your stocks, bonds or mutual funds get reported to the government as unclaimed property, the clock starts ticking. Every state I know of is either required by law, or has a procedure for selling off seized investments, usually within just one year of receiving them. Frankly, they want that illiquid asset turned into cash, because they USE the money until you claim it. Problem is, the state’s unclaimed property administrators are not investment analysts and they often sell investments at a disadvantage to you. They make no effort whatsoever to check and see if it’s an opportune time to sell, and often end up liquidating your stock when the price is low. If you later make a claim, they’ll give you the amount they got for it, but that amount may be way less than it could have been if the money stayed invested.
This is not theoretical: I did an in-depth investigation at ABC News of states doing exactly this. A British man went to retire and discovered that the 4-million dollars in US stock he had been counting on had been seized by the state of California and sold for just $200 thousand dollars years earlier! Another family had owned railroad land rights for generations, but the state sold those off, depriving the heirs of millions of dollars worth of value.
What to do? First, keep your investments from becoming unclaimed property in the first place. Be sure to make contact once or twice a year. Email your banker or broker. If you’re sent a proxy to vote because of a stock you own, do it, to show you are active. Ask for an annual review. They’re supposed to offer one anyway.
Now, if you’ve already lost track of stocks, bonds, mutual funds or other investments, get started searching for them right away. As always, the first two places to look are MissingMoney.com and unclaimed.org because most lost investments get turned over to the state where you live and those 2 websites cover all 50 states. To search for investments held in a 401k account, you can try the Employee Benefits Security Administration, part of the department of labor.
Finally, if you WERE in touch with your bank or brokerage, and you have proof, but your investments were seized as unclaimed property anyway, you may have great grounds for a lawsuit. Something to keep in mind.