Foreign Unclaimed Property

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Foreign Unclaimed PropertyPresented By:J. Brooke Spotswood, Esq. 2011 UPPO. All rights reserved.Michael Rato, Esq.1

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011In State, Out of State?It’ss All Foreign to Me!ItForeign UnclaimedlPropertyWithin the United States 2011 UPPO. All rights reserved.2

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Overview of U.S.U S Laws onForeign EscheatA.Federal Common Law1. Texas v. New Jersey2. Pennsylvania v. New York3. Delaware v. New YorkB.State Statutory Law1. Uniforma) Uniform Unclaimed Property Act of 1954 &1966b) Uniform Unclaimed Property Act of 1981 &19952. Idiosyncratic: Delaware 2011 UPPO. All rights reserved.3

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Uniform Unclaimed Property Acts of1954 & 1966 The UUPA of 1954 & 1966 makes no specificprovision for Foreign Property.Property However, the first two versions of the UUPAfocused upon property “held or owing” in a staterather than a “last known address” in a state. 2011 UPPO. All rights reserved.4

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Uniform Unclaimed Property Acts of1981 & 1995SECTION 36 (1981);SECTION 26 (1995)FOREIGN ESCHEATThis Act does not apply to any property held, dueand owing in a foreign country and arising out of aforeign transaction. 2011 UPPO. All rights reserved.5

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Partiallyll Foreign Transactions(U.S. Company but non‐U.S. Owner)SECTION 3(5) (1981);(1981)SECTION 4(5) (1995)[General Rules for Taking Custody of Intangible Unclaimed Property]Unless otherwise provided in this Act or by other statute of thisState, intangible property is subject to the custody of this State asunclaimed property if the conditions raising a presumption ofabandonment under Sections 2 and 5 through 16 are satisfied and:5. the last known address, as shown on the records of theholder, of the apparent owner is in a foreign nation and theholder is a domiciliary or government or governmentalg y of this State;; or subdivision or agencyThe Commissioners who drafted the 1995 Act left the language of subsection 5unchanged but re-numbered Section 3 as Section 4 2011 UPPO. All rights reserved.6

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 20111981 & 1995 UniformU ifUnclaimedU l i dProperty Act: Official CommentsOFFICAL COMMENT TO THE STATES:SECTION 3(5) & SECTION 4(5) provides that when the lastknown address of the apparent owner is in a foreign nationthe State in which the holder is domiciled may claim theproperty. This issue was not dealt with by the SupremeCourt in Texas v. New Jersey, but is a rational extension ofthat ruling.SECTION 26 & SECTION 36. FOREIGN TRANSACTIONS. This[Act] does not apply to property held, due, and owing in aforeign country and arising out of a foreign transaction.The Commissioners who drafted the 1995 Act repeated this comment verbatim. 2011 UPPO. All rights reserved.7

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 20111981 & 1995 UniformifUnclaimedl i dProperty Act: Other ThoughtsSECTION 3(5) & SECTION 4(5)However rational this provision appears to be, thequestion is whether or not any extension of a U.S.Supreme Court ruling, no matter how logical, isbinding.SECTION 26 & SECTION 36.36 FOREIGN TRANSACTIONS.TRANSACTIONSIn 1981 the Commissioners first drafted a provisionsto exempt “wholly foreign” transactions. Thisprovision was unchanged in 1995. 2011 UPPO. All rights reserved.8

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Is Subsection 5 Constitutional?Granted these additions make sense.sense However,However theU.S. Supreme Court’s ruling dealt with only thepriority among competing states, not withjurisdiction over an individual who is not a U.S.citizen Can a state legislate beyond or outside of thecitizen.Texas v. New Jersey guidelines? What’s the verdict?NO ‐ American Petrofina Co. v. Nance,859 F.2d 840 (10th Cir. 1988).YES ‐ Riggs National Bank v. District of Columbia,581 A.2d 1229 (D.C. App. 1990). 2011 UPPO. All rights reserved.9

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011States Enacting the UniformUnclaimed Property Act of 1981 2011 UPPO. All rights reserved.AlaskaColoradoDistrict of innesotaNew HampshireNew JerseyNorth Dakota OklahomaOklhOregonRhode IslandSouth CarolinaSouth ing10

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011StatesStt EnactingE ti theth UUniformifUnclaimed Property Act of 1995 2011 UPPO. All rights reserved. Alabama Maine Arizona Montana Arkansas New Mexico Hawaii Nevada Indiana North Carolina Kansas Vermont Louisiana West Virginia11

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011About DelawareDelaware is one of a handful of states which did notadopt the model legislation or specifically provide for“foreign transactions” in its statutes. The DelawareCode of Escheat defines the holder (debtor) as follows:Delaware Code Title 12 §1198(6)( ) "Holder" means anyy person(6)phavingg ppossession, custodyyor control of the property of another person andincludes .every other legal entity incorporated or created under thelaws of this State or doing business in this State . 2011 UPPO. All rights reserved.12

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Indian ReservationsReservations LittleLittle Known Facts Indian Reservations are subject to Tribal Ordinances. An Indian tribal reservation is considered a sovereignentity, even though the reservation is geographicallylocated in one or more statesstates. The fifty states have no jurisdiction over thesereservations. However, the tribal reservations aresubject to federal jurisdiction. QUESTION: Is a reservation a state for the purpose ofTexas v.v New Jersey? 2011 UPPO. All rights reserved.13

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011U.S. Code Title 28 § 1360(b).State civil jurisdiction in actions to which Indians are parties(b) Nothing in this section shall authorize the alienation,encumbrance, or taxation of any real or personal property,including water rights, belonging to any Indian or any Indiantribe, band, or community that is held in trust by the UnitedStates or is subject to a restriction against alienation imposed bythe United States; or shall authorize regulation of the use ofsuch property in a manner inconsistent with any Federal treaty,agreement, or statute or with any regulation made pursuantthereto; or shall confer jurisdiction upon the State to adjudicate,in probate proceedings or otherwise, the ownership or right topossession of such property or any interest therein. 2011 UPPO. All rights reserved.14

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Around the World infMinutesFifteenUnclaimedUl i dPPropertytOutside the United States 2011 UPPO. All rights reserved.15

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Puerto Rico P.R. Laws, Title 7, pt. VI, Ch. 133– Money and Other Liquid Assets Abandonedand Unclaimed– “OtherOther liquid assetsassets”:: Assets that can bechanged into money within a term less than 1year with a loss that does not exceed 50% ofvalue– Generally, 5 year dormancy period– Reports due August 10 as of preceding June30th 2011 UPPO. All rights reserved.16

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011U.S. Virgin Islands Based upon 1981 Uniform Act– 5 year dormancy period for most propertytypes– 15 yrs for travelers’ checkschecks, 7 years for moneyorders, 3 years for gift certificates, 1 year forpayroll– Normal due diligence requirement ( 50 cutoff)– Report due November 1 as of preceding June30th– Interest and penalties for noncompliance 2011 UPPO. All rights reserved.17

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Canada (Alberta) Unclaimed Personal Property & Vested Property Act (eff.Sept. 2008) Coverage and dormancy periods similar to UniformUnclaimed Property Act– Payrolly((1 yyear),), Life insurance ((3 yyears),), Securities andother unspecified property (5 years), Money orders (7years), Travelers’ checks (15 years), Gift cards exempt Jurisdiction– Holder doing business in Alberta, with Alberta owner– Holder based in Alberta, not carrying on business in areciprocating jurisdiction, but whose records show theapparent ownerowner’ss last known address to be in thatjurisdiction– Holder based in Alberta, unknown owner 2011 UPPO. All rights reserved.18

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Canada (Quebec) Property covered:– Bank deposits– Checks, drafts, and bills of exchange– Amounts payable for the repayment or redemption ofdebt securities– Securities and other assets received by a securitiesadviser or broker– Life insurance proceedsp Generally 3 year dormancy Property held by province for 10 years, or 30 years if or morevalued at C 500 Fees of 10% (up to C 1,000) to recover property fromprovince 2011 UPPO. All rights reserved.19

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Canada (British Columbia) “Mandatory”y Holders– Credit Unions– Debt Collection Agencies– Municipalities & Courts– Real Estate Agencies– Companies in liquidation Other holders are voluntary Property types covered: life insurance policies,property insurance polices, trust funds, deposits,money orders Due diligence required 2011 UPPO. All rights reserved.20

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011CCaymanIslandsIl d Dormant Accounts Law of 2010– 7 year dormancy period Property held in trust by government for additional6 yearsy– As with most U.S. unclaimed property laws, once thefinancial institution has turned over the funds, theowner must claim the funds from the government– Notification requirements Newspaper publication for Cayman residents ListingLi ti on bankb k websiteb it or att bbank’sk’ principali i l officeffifor non‐residents 2011 UPPO. All rights reserved.21

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011Eastern Caribbean No unclaimed property laws of generalapplication Eastern Caribbean Central Bank,, the monetaryyauthority for Anguilla, Antigua and Barbuda,the Commonwealth of Dominica, Grenada,Montserrat, St Kitts and Nevis, St Lucia, and StViVincentt andd ththe GGrenadines,dimaintainsi t i anAbandoned Property Holders list of dormantaccounts held by those islands’ regulatedfinancial institutions 2011 UPPO. All rights reserved.22

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011United Kingdom 2011 UPPO. All rights reserved.http://www.mylostaccount.org.ukh//lk– Website maintained by British Bankers’ Associationand others for unclaimed bank accountshttp://www.thepensionservice.gov.uk– Pension tracing servicehttp://www.bonavacantia.gov.uk– Office of the Treasury Solicitor– Unclaimed estates23

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011S it l dSwitzerland No unclaimed property laws of generalapplication, but mandatory rules for membersof Swiss Bankers Association– BanksB k performfddue dilidiligence, if possibleiblunder confidentiality obligations– Funds reported and remitted to “CentralCentralClaims Office”– Underlying funds continue to accrueinterest 2011 UPPO. All rights reserved.24

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011A t liAustralia Administered by Australian Securities andIInvestmentstt CommissionCi i ((searchableh bl database)d t b )– http://www.asic.gov.au Banking Act– Deposits and other assets from banks, creditunions, and building societies CorporationspAct– Unexchanged shares resulting from M&A activity Life Insurance Act– Policies unclaimed 7 years after becomingpayable 2011 UPPO. All rights reserved.25

2011 UPPO ANNUAL CONFERENCEMARCH 6-9, 2011N ZZealandNewl d Trustee Act– Allows trustees to pay money or securitiesheld by a trust to the Crown. Treasury holdsmoney for six yearsyears, and thereaftertransferred to the Crown Unclaimed Money Act– Deposits in financial institutions– Wages– Dividends– Property held by solicitors (lawyers) 2011 UPPO. All rights reserved.26