Money Left Unclaimed in Dormant Accounts

Ray’s Take: It’s crazy to think that there are billons of hard-earned dollars left behind or forgotten about in dormant accounts all across the world. But with that much money left unclaimed, there are clearly many reasons accounts go dormant. Moving to another state and forgetting to close accounts is the usual culprit.

In 2017, significant changes were made to the Tennessee unclaimed property law. The revised law reduced dormancy periods for many property types from five years to three years and introduced new provisions for specific property types – including health savings accounts, custodial accounts and stored-value cards. Dormancy periods vary by state and type of account.

To become dormant, the owner of the account must not have initiated any activity for a specific period of time. Financial institutions are required by state law to make an attempt to contact the owners of the dormant accounts. If this is unsuccessful, unclaimed money in the account is transferred to the state’s treasury department – meaning they get your money.

If you think you have forgotten accounts and unclaimed money, the best place to begin your search is www.Unclaimed.org, the website of the National Association of Unclaimed Property Administrators (NAUPA). This free website contains information about unclaimed property held by each state.

There are services that offer to search for unclaimed inheritance money for a fee. Unless you have reason to suspect that there is a significant sum of unclaimed money out there or your loved one lived abroad, it makes more sense to conduct the search yourself.

I saw a funny commercial suggesting that some people who’ve changed careers keep their old business cards just to remember where their old 401(k) accounts were. Be sure to keep track of all your accounts and never let them go dormant. Even though a dormant account is inactive, it is still subject to fees and maintenance charges, which can erase the balance of your account over time or even put you in the negative.

Dana’s Take: Have you visited your storage unit or lockbox lately? In them, you may find some of your very own unclaimed property, like rare coins or family jewelry. It’s funny how we move these collectibles around, but don’t actually use them. Consider a family meeting to decide what to do with family valuables.

Fees on storage units really add up, and most of what they hold is guilt. Often storage units hold sentimental things, which are the hardest to release. In Peter Walsh’s excellent book, Let It Go, he emphasizes that our hearts and minds hold the memories of cherished loved ones, not the objects themselves. Find a nonprofit like Habit for Humanity’s Re-store and donate once-loved treasures to help others.

Check your storage spaces and see if it’s time to free up some physical and emotional space.

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Protect Yourself From Identity Theft

Ray’s Take: Back in 2013, I turned down $1.5 million dollars that I was awarded by a Nigerian prince. He just needed my name, address and social security number to wire the millions directly to my bank account. I also won the lottery several times over the last several years. I completely forgot to send my personal information to the “lottery office” so unfortunately I didn’t get all those winnings.

 

Everyone has stories like these if you use any kind of technology and while these examples of identity theft seem comical, there were 16.7 million victims of identity theft last year. Thieves stole over $16.8 billion dollars from U.S. consumers. Identity theft happens once every two seconds. Basically, you are more likely to become a victim of identity theft than having your car stolen or your home burglarized.

 

There are all kinds of identity theft programs out there that offer identity theft protection plans such as Experian, LifeLock and Identity Guard, just to name a few. If you don’t have room in your budget for these protection plans, here are some basic things you can do to keep your information safe.

 

Income tax identity theft cost the IRS approximately $6 billion last year. File your tax return early to beat criminals to the punch. Make sure your anti-virus security software is up-to-date on all of your devices. Keep your passwords and security questions secure and change them frequently. And limit the use of your ATM card and use your EMV chip credit card whenever possible.

 

The bottom line is there is no privacy anymore and there is nothing that can protect you 100 percent. Simply do what you can to keep your personal information safe and teach your children to protect their identities as well.

 

To report identity theft, visit the Federal Trade Commission website to file a claim, then call the three major credit bureaus to create a fraud alert for your file. In addition, contact your banking institution and complete a police report at your local law enforcement office.

 

Dana’s Take: Since most businesses know us as a number, instead of a face, identity theft has become a real headache. Back in the 1950’s most merchants recognized the faces of their customers but then again, you also couldn’t order a book from Amazon at midnight.

 

Since identity theft seems to be a growing part of modern life, we might as well be prepared for it. Your bills will keep coming and not all creditors are patient. Keep a backup card with an account that will never go in your wallet. Also, keep your money in more than one bank so you can continue to pay your bills while the financial institutions sort out the situation and to protect your credit rating.

 

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Financial Literacy and Adults

Ray’s Take: Can you explain what risk diversification is? Can you identify the effects of inflation? Do you know how to calculate interest? If you answered yes to these three questions, you are better off than 43 percent of Americans and a whopping two-thirds of the world’s population, according to Maggie McGrath in an article written for Forbes Magazine about the results from the first-ever S&P Global FinLit Survey.

 

Also, according to this survey, only one-third of the world’s population is financially literate. The U.S. was ranked a dismal 14th in financial literacy compared to all other countries in the world.

 

By definition, financial literacy is the ability to understand how money works in the world. This means knowing how someone earns and makes money, how to manage it, how to invest it and how to donate it to help others.

 

We have a financial literacy problem in America. Former Federal Reserve Chairman Ben Bernanke, said, “Widespread problems like the subprime mortgage market and the resulting rash of foreclosures and bankruptcies illustrate just how serious this lack of financial education has become in today’s world.”

 

“Financial ignorance carries significant costs. Consumers who fail to understand the concept of interest compounding spend more on transaction fees, run up bigger debts, and incur higher interest rates on loans. They also end up borrowing more and saving less money,” said the authors who compiled the S&P FinLit Survey.

 

When it comes to money and your finances you can never stop learning. There are always new trends, products and situations where you need to spend time researching and educating yourself.

 

There are lots of resources available to help you improve your financial literacy. You don’t necessarily need to attend a class or join an online course. Read as much as you can. You can go “old school” with The Wall Street Journal or Barron’s. Or you can go global with The Economist. Always remember that there’s someone on the other side of every transaction who may or may not have your best interest at heart.

 

Dana’s Take: Rather than facing financial realities and learning how to manage money, some people prefer to spend as if they were their financial “dream self.”

 

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Name SearchWatch Service'>Peter Walsh’s book, It’s All Too Much, he says that we often keep possessions that reflect our “dream selves.” For instance, my “dream self” throws big outdoor parties, so I must keep a dozen tiki torches. Since I have not accomplished this, I should grieve that they represent a dream not realized and get rid of them.

 

Similarly, I think we make financial choices based on our dream selves and not in the reality of our actual paycheck. This is called aspirational spending. Financial education can help people get where they want to go.

 

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Weigh Your Options For Long-Term Care

Ray’s Take: As of August 2017, the oldest person alive was a 117–year-old woman named a class="learn" style="color: #7d0200; text-decoration: underline;" href="htp://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Violet&ln=Brown" rel='

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Name SearchWatch Service'>Violet Brown from Jamaica. And when I scrolled through the list of the top 100 oldest people alive, only three were men. I’ll let you try and make sense of that.

 

It’s just a fact that we are living much longer than our ancestors. Laura Carstensen, Ph.D., director of Stanford University’s Center on Longevity, said, “The good news is we are living longer. The bad news is … we are living longer. Thanks to advances in science and technology, we have added more years to our life expectancy in the past century than in all of human evolution to this point. It’s a success that’s viewed with a mixture of pride, doubt and – if your job is calculating risk for a health insurance company – dread.”

 

But living longer can place an unexpected burden on you and your family if you haven’t planned ahead. Many people are seeing this trend and opting to purchase long-term care insurance policies to protect their spouse, children or other family members from being financially responsible for managing their care in the event they need daily assistance because of old age, an unexpected accident or disability.

 

Long-term care insurance helps provide care beyond a pre-determined period. Generally, long-term care covers services and support not covered by your health insurance, Medicaid or Medicare. This includes personal care and things to assist with daily living. In most cases, you are reimbursed a daily amount (up to a pre-selected limit).

 

In my experience, I have found that investing in the companies selling the products to support long-term care can be more beneficial to your overall financial plan than purchasing the actual policies. For some, alleviating the anxiety of the risk through insurance can be worth every penny. But for others, it’s important to pass along their portfolio to their heirs and shift the risk of long-term care to an insurance company. It’s a personal decision, but should be evaluated with an independent party.

 

Dana’s Take: Most of us are hopeful that our children will take care of us until we draw our final breath. But in reality, the number of adult children who can be full-time caregivers is shrinking.

 

My aunt turns 99 years old this year. She still cooks and her children take her to appointments.

 

Some of our other family members live in lovely life-care communities. They have great food, lots of activities and caregivers on-site for all stages of life.

 

Both have been great options. Look at your budget and figure out what’s best for you. We can’t know what will happen tomorrow, so it’s always good to have a plan.

 

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New 529 Plans Buy Education Options

Ray’s Take: Did you know that back in 1870 you could attend Harvard for a mere $150 per year, and for half that amount, you could attend Brown University? According to Best Colleges, college costs began to rise in the 1970s at a rate much higher than inflation, and this hasn’t slowed down.

 

If you have children or even your own desire for a higher education, the price of college tuition this day and age can be staggering and downright depressing. Many Americans find themselves wondering where they will come up with the funds to pay for it without incurring large amounts of debt.

 

In the 1990s, 529 plans were introduced to help parents save for increasing higher education costs. Last year, the Tax Cuts and Jobs Act had some interesting news for parents. For the first time, 529 plans are eligible to be used for K-12 private school tuition. This simple change will have a significant impact on how a large number of Americans will approach their strategy for education funding.

 

Families with children in private or parochial schools will be able to tap their college savings plans to pay for up to $10,000 in private school tuition. Before using this approach, consider what’s most important to you – K-12 education or college.

 

Either way, money buys options, and the sooner you start the better off you will be.

 

The new tax for custodial accounts for kids under 18 is pretty unfriendly, but there is still a place for them since they have flexible terms for distribution. For example, if your child needed a car while at college, you’re out of luck with the 529s but a custodial account could be used for the purchase.

 

Also, if there are leftover custodial savings, this could be used to help your college graduate start off with some money in the bank. Leftover 529 funds are much more complicated.

 

Consult with a trusted financial adviser before considering these savings options.

 

Dana’s Take: With a child in college now, we have experienced planning and saving for college expenses. Now, we are learning about add-on expenses that were not included in the budget. Did you know if a student doesn’t like their grade in a college class, they can retake it at a community college and try to improve their grade? Further, a whole new category of student has emerged since our college days, known as a “super senior,” a college senior who returns for a second year.

 

Fortunately, with part-time and summer jobs, students can build an emergency fund to cover all these extra expenses. Students can research the costs of retaking classes, summer travel and even funding a “super senior” year. Students can even start building their college emergency fund while still in high school.

 

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