1. Uncovering the Mystery of Escheat with Mineral Proceeds
Kristy Strickland
Subject Matter Expert

2. Unclaimed Property / Escheat
Unclaimed Property – a liability a company owes to an individual or entity when a debt or obligation remains outstanding after a specified period of time
Escheat – when someone dies and has no heirs
Unclaimed Property and Escheat –the process to send owner’s uncashed checks to the state
Unclaimed Property or Escheat seems to be a hot topic of conversation every year. Every year, we find more and more clients who have not heard about Unclaimed Property or have no idea that this issue pertains to them or the company they work for. What we want to do is provide you with basic information that you can take back and mull over to see how you can take a proactive approach when it comes to taking care of your Unclaimed Property payments.
There are two terms that I think are important to understand, but in reality this is just a process to send owner’s uncashed checks to the state. When you hear the term Unclaimed Property, it is referring to revenue that is due to an owner and for whatever reason, that owner never deposits the funds. The owner is still around, but maybe you have been unsuccessful in finding him/her.
Unclaimed Property/escheat terms are used interchangeably.

3. What You Need to Know 4 Basic Characteristics:
The property is intangible personal property
Owner generated activity ceases to occur with respect to the property
The property remains unclaimed by the owner for a specific period of time
There is a “fixed and certain obligation” owed by the holder to the owner
All of that can be pretty intimidating, but here is what you really need to know. The 4 basic characteristics of Unclaimed Property are the following:
The property is intangible personal property – something that may not be a physical thing, but ownership that can be transferred to another person (uncashed checks, outstanding customer credit balances, unclaimed stock certificates, mineral proceeds, customer deposits)
Any dealings the owner has related to the property has ended (
If the dormancy period has been reached, and the owner has not come forward during that time, it becomes unclaimed property
If you as the company responsible for getting the payment to the owner, you do have an obligation to do your due diligence in getting the money to the rightful owner in a reasonable amount of time

4. This doesn’t apply to me…does it?
Do you have any of the following?
Uncashed vendor or payroll checks
Suspense funds for Oil & Gas (Mineral Proceeds)
Credit Accounts Receivable balances
If any one of these applies to your company, you could be at risk for an intensive audit! Check with your CPA or attorney to find out for sure.
Now, you may be saying that the issue of Unclaimed Property doesn’t apply to you – or maybe not, since your sitting here in our session today! But, every company needs to ask themselves these questions. Does your company have uncashed vendor or payroll checks? What about revenue checks that have been sitting in a Pay type suspense account? And surely, no one here has accounts receivable credit balances…surely not…
Just last week in my Revenue Billing class, we were talking about suspense codes. I usually bring up Unclaimed Property – because remember, I’m always finding people that don’t know about this state law! So we were talking about it and one of our attendees started asking questions about some reports she found. She started running open item reports and found that there were uncashed vendor checks going back to This kind of thing happens a lot! This company will now need to do research to find out why these checks weren’t cashed…Unclaimed property includes vendor payments that are still outstanding. Just be aware of your outstanding checks – this applies to owner payments, employee payments, vendor payments…basically anyone you cut a check to.

5. Why Increased Activity for Oil and Gas?
Unclaimed property is a significant source of revenue for many states
National Association for Unclaimed Property Administrators (NAUPA) reported that of the $7.63B unclaimed property reported, only $3.23B was returned to owners (fiscal year 2015)
Complex accounting for mineral proceeds creates an easy target for an Audit
Audits can last 3-10 years
It continues to be a hot topic every year, because whether we really want to know or not, the state depends on this money for balancing their fiscal year budgets. There is a lot of money out there being held by the state. You all should go check yourselves! Just working through this presentation, I found a $60 check that my husband never cashed and the state has just been holding on to it all this time.
The disturbing part about Unclaimed property is that when states are needing funds, they could potentially start finding some revenue sources…that means auditing your business to see what kind of money they can seize. Audits can last 4-10 years. We know regular audits aren’t all that fun, can you imagine being caught in one for 3-10 years?

6. Why Increased Activity for Oil and Gas?
Dormancy periods vary across states leading to a complex and confusing process
Every U.S. state, District of Columbia, Puerto Rico, the U.S. Virgin Islands
Quebec, British Columbia, and Alberta in Canada
Dormancy periods can be anywhere from 1 year to 5 years
The other issue is that each state including some other areas have different dormancy periods and different rules which can be overwhelming if you haven’t had to dig into this before. Researching each state’s rules can be time consuming and confusing. Ohio for example is 1 year.

7. Who is Involved?
The Owner – person who holds ownership to the minerals associated with a property in which they have an interest in
The Operator – liable for holding the funds when there is no activity from the owner and escheating the funds to the state after the dormancy period
The State – set to receive the funds from an operator that previously belonged to the owner using the last known address of that owner
There are really just three groups involved in this process – the owner, the operator, and the state. The owner is the person who owns the decimal percentage of interest in the property’s mineral proceeds. They receive the check from the Operator. The Operator has an obligation to the owner to ensure payment is made on time. If the Operator let’s the payment sit longer than the dormancy period, then the state has legal right to the funds. It is the Operator’s responsibility to get the money to the state. If they don’t, and the state finds out about it, it could mean big fines for you! Once the state receives the funds, it really is up to the owner to claim those funds and prove they are who they say they are. States will put names online to help people find their Unclaimed property, but again each state has their own rules about it.

8. Report Frequency Varies by state
The dormancy or abandonment period is reached as defined by the state
Once you have determined that you have unclaimed property to submit, you have to learn each state’s rules. The unclaimed property funds goes to the state of the owner’s last known address. You have to know the rules, because some states will try to fight over the money. If the owner’s interest was in a property located in Texas for example, but the last known address of the owner was in Oklahoma, then technically, the money would be sent to the state of Oklahoma.

9. What Happens to the Money?
AFTER DORMACY
Unclaimed Property is handed over to the state of the owner’s last known address
WHICH STATE?
If the state is unknown, property goes to the state of incorporation for the holding company
IS IT LOST?
States have own rules dictating the holding period until the property becomes property of the state
There are many different situations that can come up when you are researching unclaimed property. If the dormancy period is up, then we know that the unclaimed property goes to the state of the owner’s last known address. But let’s say you don’t know the last known address for that owner? What then??
If the state is unknown, then the property goes to the state of incorporation for the holding company. In other words, if the holding company has offices in several states, but it started in Louisiana, then the unclaimed property would go to the state of Louisiana.
If the funds are really lost, meaning that the rightful owner or heirs of that owners do not come forward, it is up to the state as to when they can claim it as state property.

10. Reporting to the State Review dormancy policy for each state
Execute due diligence
Create and review report for each state
Submit report and payment electronically
Store owner records after submitting records to the state
So far, you are probably thinking that you have learned way more about unclaimed property than you cared to know, right? Well, now that you know the what, who, why and when about unclaimed property, let’s talk about the how. If you do this on your own, you have several steps that will be required in order to accomplish the goal of sending money to the state.
First, learn all the dormancy policies of each state. Remember 50 states, means 50 different set of rules.
Second, take care of business. There are rules about how often you have to attempt to contact these owners who haven’t cashed their checks. Remember 50 states, means 50 different set of rules.
Third, create and review a report for EACH state that you have owners living in….did I mention 50 states and 50 different set of rules?
Next, submit the report and make the payment. Some states want the report electronically…some want it by paper. Some states want it twice a year, some states don’t want anything reported if it meets certain criteria. I may not have said this, but just in case, there are 50 states with 50 different set of rules.
And finally, you have to keep records for a length of time according to state rules…that’s right…say it with me…50 states with 50 different set of rules…
There is a lot of work that happens in the unclaimed property process. A lot of work that most people don’t have time for and that is probably one of the main reasons that this issue isn’t addressed as timely as it needs to be.

11. WolfePak Works for You!
WolfePak updates Unclaimed Property tables behind the scenes so you don’t have to
Due dates
Revenue dormancy periods
If negative reporting is needed or not
Due diligence letter minimums and due dates
Record retention requirements
Payment type allowed by state
Recently added Payroll, vendor and other check rules
State’s address to send funds to
Now that you know all of the hard work that would go into taking care of unclaimed property, let me share some things with you that will make your life easier.
WolfePak has an unclaimed property module. There are many things that it will just do for you. The team at WolfePak first does the research for you. Remember that 50 different states…50 different rules thing?? Yeah, we do that. Due dates, dormancy periods, rules about negative reporting, due diligence letter minimums, record retention, payment types, rules about payroll, vendor or other checks are updated as well as state’s address to remit payment too --- all of this is done for you every year.

12. Settings Reviewed Annually
The unclaimed property settings are located in the Utilities modules under the Global menu item. These settings are only visible to the users. Your WolfePak team will update these settings on an annual basis. You can review due dates, current pay state rules (meaning once sent to the state, they are always sent to the state), record retention, outstanding check options and more. If you have any question about how the reports are generating information, you can review the information here.
It is important that users do their due diligence in verifying the settings we have put in place. If you know of a new law coming in your state, let us know so that we can take care of the changes that will be needed.
Record rentention is also important. Each state has different rules on retention. You have to have records available if you ever are involved in an audit.
The Unclaimed Property menu is found under the Bank Reconciliation module. WolfePak will help you start a new year, run reports, update owner maintenance and finalize your cycle by state.
The reports section basically creates a to-do list for you to follow in an easy, step-by-step guide.

13. Unclaimed Property Reports
Listing by Due Date – Lists items that are due for the Reporting Year by due date
Includes list of past due items and completed items
The first thing you will need to know are the due dates for each state. We have clients that will run the due date listing at the beginning of the year and have that out as their reminder. This report will also tell you if you have owners that meet the dormancy criteria and whether you need to do anything about it or not. If you have never used the WolfePak Unclaimed module before or maybe you’ve never gone through this process before, the report will also let you know if there are any items past due. This report can be generated at any point during the year for updated information.

14. Unclaimed Property Reports
Here is an example of the due date list. You will see the due dates, the state and what items are required. The status on the right will let you know if the option has been completed or not.

15. Unclaimed Property Reports
Owner Address List by State
Any owners who have amounts held that qualify to be reported as Unclaimed Property are listed by State
The owner Address list by state will give you names of those who have dollar amounts that met the unclaimed property requirements. This list is helpful to you as you make attempts to contact these owners. Contact notes are required to be recorded during the due diligence process. WolfePak assumes that you have entered the last known address for that owner. This address is also reported when sending funds to the state.

16. Unclaimed Property Reports
Owner list by State
Lists owner names and suspense amounts by state
Includes suspense totals, letter due date, state report due date, payment due date
Also list cutoff dates for payroll, vendor and other type checks
The owner list by state will give owner names and dollar amounts in suspense sorted by state. This report provides key dates as it relates to the owner’s unclaimed property requirements. From this report, you can see the check amount, the revenue cut off date or when the dormancy clock started, the date in which you need a letter delivered to the owner and the payment due date when sending funds to the state.
If someone changed the address to ‘do not use’ or ‘bad address’ and deleted the address from the record, you can find the old address through the change log. You will need this for when you escheat the money for this owner. The money goes to state of the last known address for that owner.
This a great resource if you want to make calendar reminders or make notes in your tickler file.

17. Unclaimed Property Reports
Recap by State
Lists one line by state and includes the number of owners, suspense amounts
Also include due dates for owner letters, report and payment due to the state
The recap by state is just that. It is a bird’s eye view of the type of items that are required by each state. Instead of looking it at the owner level like we did in the previous slide, this report looks at the totals for each state.

18. Unclaimed Property Reports
Due Diligence Letters
When extracted, this report will create letters to owners with an address and who have not been previously reported
Can be printed by state – due date auto populates according to the settings updated by WolfePak
Option to ignore state minimum amounts
Due Diligence letters are extremely important as you have to proved that you did everything you could in your power to reach out to these owners. Our system will create letters for you – basically a mail merge type document, so all you have to do is run this report and print out the letters to send them. Letters will only be sent to owners who have not been previously reported to the state.
You can choose to print the letters by state, which is helpful especially if you have created calendar reminders or put a note in your tickler file.
Each state has a minimum amount requirement, but we do give you the option to send a letter to that owner anyway just to help you send money to the rightful owners. It is also important to note that each state has a law about when the due diligence letters can be sent out. There is a certain window of time that the letters have to go out before the funds can be sent to the state.

19. Unclaimed Property Reports
This is an example of the letter we provide for you. Your company information is automatically inserted as well as the owner’s name and address. Just one more little thing we do for you to help save you some time.

20. Unclaimed Property Reporting
Comparison Report Only
Option to automatically reload owner information from suspense records
Report owners with changes in addresses, suspense codes, historical suspense amounts, etc.
The comparison report will give you the option to update the owner’s information from the suspense records. It will also report changes in addresses, suspense codes, historical suspense amounts, etc. This is a great tool to make sure that the data you have is correct for each owner.

21. Unclaimed Property Reporting
Warnings Report – by state or blank option for all states
Individuals with owner names that include “and” or “&” but have not been coded as an additional owner, data truncation, etc.
Electronic file listing for state
This allows user to run a preliminary listing for a specific state
Other options include resubmittal and test file
Creates the file to upload to the state for electronic filing
The warnings report will help you identify those owners that might have more than one owner name. For example, you might have a owner names listed on the account as John and Jane Doe. The file you send to the state would need to have them coded as two separate individuals and be included in the submittal file that way.
The print out of the electronic filing is a great way to get a preliminary listing for each state. You want to review this to ensure the information you have for the owner is correct. There is also a resubmittal option and a test file option. States that accept electronic filing will allow a test file to be submitted beforehand. It’s best to get the wrinkles ironed out before the due date.

22. Historical Reports
Prior years can be reviewed as long as the Unclaimed Property process was completed in WolfePak
Historical records by owner and by state are easily accessible
WolfePak saves historical information for you as long as the states were finalized within the Unclaimed property system. You can easily find records either by owner or by state for your reference.

23. Reporting Responsibilities
Reporting Unclaimed Property relies on the data entered into the system
Keep accurate records on any contact with the owner
Stay on top of any outstanding checks in the monthly bank reconciliation
Review Owner Maintenance within the Unclaimed Property module and make adjustments as necessary
The Unclaimed Property system will saves you time, headaches and potentially money in the long run. If you are like most companies, staffing resources are limited and your time is valuable. We care about our customers and try to find ways to help you become more efficient and reduce some of the stress that Unclaimed Property procedures can bring.

24. Sources
National Association of Unclaimed Property Administrators (NAUPA): or
Unclaimed Property Professionals Organization (UPPO):

25. Questions?