Two years ago, I wrote a column that frightened a lot of people. Now, I’m going to scare you again — this time, maybe even more.
That column, which appeared on Sept. 24, 2015, explained that it had become easier for states to confiscate people’s bank, money market and other financial accounts because they were “abandoned.”
So-called escheatment laws have been on the books forever. But states have been changing the rules so that it has become simpler for them to consider an account dormant — and then take it over.
It’s a great scam for states that are desperate for money.
I wrote that 2015 column at the urging of the Investment Company Institute, which represents mutual funds and other financial institutions. The ICI was rightly concerned because these days an account could be considered abandoned even if the owner regularly got paperwork from the financial institution.
In today’s world, the owner has to take an active participation in the account — deposit or withdraw money, make an inquiry, etc. — in order to avoid this fate, ICI told me.
“No, no, no,” a lot of readers wrote to me. That couldn’t be true. The ICI and I must be wrong.
Well, here’s a personal story that will convince you and probably make you run to your bank today.
In 1999, my mother, Margaret Crudele, did a very nice thing. She opened a bank account at Staten Island Savings Bank for each of her eight grandchildren. She deposited $1,000 in each account, and she wanted the kids to get the money after she died.
Not a great deal of money, but a wonderful gesture for the kids, who were in their teens at the time.
I don’t think I ever knew about the accounts, but my sister did. And since my mother is still going strong today at 90, there was never a reason to think about the money.
Staten Island Savings Bank was acquired by another bank, which then merged into still another. Santander Bank, a Spanish company, took over all of them around 2009.
My mother’s checking and savings accounts were automatically transferred from Staten Island Savings to each successor bank and, finally, to Santander, where she became a regular customer who visited a branch at least once a week.
To put it bluntly, each one of these banks knew that she isn’t dead. She walked through the bank doors every week. She still does so at Santander.
But somehow, the eight grandchildren’s accounts went missing. Were they stolen? Misplaced? Turned over to New York because my mother hadn’t actively managed them?
My mother never would have cashed them in, and there’s no record of her doing so.
And in what year could any of those snafus have happened? Maybe when Staten Island Savings was still in business. Or when the banks were tidying up their books during each merger.
It turns out that the accounts went bye-bye in 2005 — all on the same day. The kids, who didn’t have the paperwork, didn’t withdraw the funds.
And there is no record of where the money went. I only know this because Santander went the extra mile to investigate something that — it turns out — happened long before it arrived on the scene.
And, yes, we’ve checked New York’s abandoned property lists, and the accounts are nowhere to be found.
I still have people looking for the cash, and it will probably be found eventually — but surely missing the interest that would have accumulated over the years.
So, there you are. Don’t doubt that this can happen to you. Scared yet? Do you know where all your accounts are?