In Texas, the state government sent one man a check for more than $12 million . A California woman pocketed $58,000 , while a man in West Virginia received $17,000 . These lucky people didn’t win the lottery. But they did receive another type of windfall from the government: unclaimed cash.
It is estimated that more than $40 billion in unclaimed money is out there waiting to be found by rightful owners, mostly languishing with state governments. California alone is trying to give away $9.3 billion . These orphaned funds come from many sources , such as forgotten bank accounts, insurance benefits, wages, bonds, and safe deposit box holdings.
States collect the money from banks, corporations, insurance companies, and other organizations. These entities are required to turn over unclaimed property if they can’t locate the owner of an account or if it has remained inactive for a certain period of time. In many states, this threshold is five years.
Why would people leave money on the table? They usually don’t do it on purpose. Most often someone simply forgets about one of their accounts, dies without informing their descendants about it, or moves without a forwarding address.
That means there’s a chance one of those unsuspecting owners is you. Your search may prove fruitless or turn up a few pennies, but now and then people unearth a substantial chunk of change.
How to Find Unclaimed Money
Money usually remains unclaimed because owners have no idea it exists. That’s why it may be worth searching for funds in your name just in case. So how do you go about it? Unfortunately, there’s no single place you can look for all potential unclaimed cash. It may take some work, but here are some steps you can take to help make sure you’re claiming everything that’s yours:
Searching State Databases
A good first step may be to hunt for unclaimed funds at the state level. Each state has an office that oversees unclaimed property, typically housed in the state treasurer’s, controller’s, or comptroller’s office.
Don’t forget to search your name in the database of each state where you have lived, not just the one where you live now. Make sure that you are searching the official state site (it should have .gov in the URL) to avoid scams. Also you may want to consider searching under your maiden name in addition to your married name
You can continue your search by checking MissingMoney.com , which offers a multi-state database endorsed by the National Association of Unclaimed Property Administrators.
All of these searches are free to complete—if someone asks you for money to complete a search, that’s a red flag.
If you happen to find unclaimed property, each state has its own process for proving that you’re the true owner and getting your hands on the cash. Many states allow you to file a claim electronically.
Usually you need to provide some kind of official documents to prove that you’re the person named as the owner. Luckily, there is typically no time limit for claiming the money. If the owner has died, you can typically file a claim if you’re an heir, trustee, or executor of the estate.
Looking for Unpaid Wages and Pensions
If your employer owes you back wages, you can search the Department of Labor’s database . Start by inputting the name of the employer. You typically have to move quickly in this case, since the agency only keeps unpaid wages for three years.
You can also look for pensions from a former employer. Pension funds may be unclaimed if a company closed its doors or ended a particular pension plan. You can look for funds through the website of the Pension Benefit Guaranty Corporation , which is a government agency.
Checking for Unclaimed Tax Refunds
If you unknowingly failed to receive a tax refund at some point, you can track that down through the Internal Revenue Service ’s website. Keep in mind that you will need to know the exact refund amount in order to conduct the search.
Searching for Insurance Funds
Many insurance companies transfer unclaimed funds to states, but a couple of federal government agencies maintain their own unclaimed funds databases. The U.S. Department of Veterans Affairs holds onto unclaimed VA life insurance funds for most policyholders, and if they’re deceased, their beneficiaries.
People who had mortgages insured by the Federal Housing Administration can check for potential unclaimed refunds on the website of the U.S. Department of Housing and Urban Development .
Being Aware of Scams
Where there’s free money, there are bound to be con artists trying to take advantage of it. Some companies may offer to help you find and recover unclaimed money for a fee of 10% to 30% of the amount. Paying these fees is pointless, since you can search for unclaimed property and reclaim it for free (or perhaps for a small processing fee to the state).
Another type of scam involves fraudsters pretending to write to you on behalf of the state informing you about unclaimed property.
On official-looking letterhead, they promise you a vast sum—as long as you provide personal information and pay a fee in advance. Of course, the funds never materialize, and those who fall for the con forfeit the fee and may even become victims of identity theft.
Using Your Unclaimed Money
If you happen to be one of the lucky people who finds cash waiting for them, what should you do with it? You may be tempted to blow the surprise windfall on those new shoes you’ve been eyeing or on a dream vacation.
But depending on the sum you receive and your financial situation, there may be smarter ways to put the unexpected money to use:
Paying Off Debt
If you have high-interest debt, many people suggest putting much of your extra cash toward knocking it out. That’s because interest rates can cause a balance to balloon significantly over time, meaning the longer you wait to pay off your high-interest debt, the more you’ll likely pay overall.
Credit cards and payday loans tend to have high interest rates, but you may also want to check the rate you’re paying on your student loans, car loan, personal loan, or mortgage. One method for potentially paying off your debt faster is to tackle your highest-interest debt first, while staying on top of minimum payments for your other liabilities.
Building An Emergency Fund
Once you’re on top of your debt, or at least the highest-interest liabilities, it may be a good idea to establish an emergency fund.
Common knowledge suggests having enough saved to cover three to six months of living expenses.
It may be a good idea to keep this money in a safe place, like a savings account, for unexpected emergencies such as car repairs, medical bills, or a layoff. Having an emergency fund may help you avoid getting into high-interest debt in the future.
Saving for a Goal
Once you have a basic emergency fund, you may want to start setting aside money to get closer to a big financial goal. Maybe you want to have a wedding, travel, start a business, or buy a home.
Saving in advance means you may need to take out less in loans or credit card charges, or might be able to avoid them altogether, keeping more of your money in your pocket.
Investing for the Future
Another option is to invest your money in a individual retirement account, college savings plan, brokerage account, or another vehicle.
Investing your money for the long-term could allow you take advantage of the power of compound interest and potentially increase your chances of reaping solid returns over time. It can be tempting to spend your lucky find on short-term fun, but investing may set you up for financial freedom in the future.
Getting Smart About Money With SoFi Money®
Whether it’s deciding what to do with reclaimed cash or figuring out how to afford a big goal, life poses plenty of personal finance challenges.
A SoFi Money cash management account may be able to help you navigate these confusing waters by allowing you to track your spending. Even if you don’t come across an unexpected windfall, SoFi Money can help you manage your money.
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