For any business, reducing unnecessary administrative costs is essential to financial success. Many companies, however, have an invisible administrative liability lurking on their balance sheets in the form of dormant accounts payable.
Each year, millions of dollars go unclaimed in B.C. in dormant credit union accounts, as unpaid wages, overpayments to debt collectors, outstanding proceeds from courts, pension plans, estates and forgotten real estate deposits.
In fact, there is approximately $160 million sitting in orphaned accounts in B.C. waiting to be claimed by the rightful owners, according to the BC Unclaimed Property Society (BCUPS), a not-for-profit organization charged with administering the province’s unclaimed property program.
“A lot of companies and organizations aren’t aware of their legal responsibilities when it comes to unclaimed funds,” points out Alena Levitz, executive director of BCUPS.
Responsibilities under the Unclaimed Property Act
Under the British Columbia Unclaimed Property Act, holders of forgotten funds must make a reasonable effort to locate and notify the owner of a dormant account if there has been no access or activity for a specified period of time ranging from one to 10 years, depending on the type of account involved. If they can’t locate the owner, holders are required to maintain a database of unclaimed funds they hold. That database must be easily accessible to the public, meet privacy obligations and include the necessary information about each account.
“This all takes time, money and resources,” says Levitz. “Then, of course, you have to deal with inquiries and substantiate claims.
“Fulfilling all the requirements under the Unclaimed Property Act can be burdensome for any company,” she adds.
Simply ignoring the dormant accounts on your books can lead to administrative hassles down the road. If your company or organization is audited, all that unclaimed property on your books may prompt the auditor to delve a little deeper into your financials. Also, if you’re contemplating selling your business, dormant accounts sitting on your books may be unattractive to potential buyers.
BC Unclaimed Property Society has the tools and actively searches for owners of forgotten funds
Transferring unclaimed funds to BCUPS fulfils a company’s legal obligations under the Unclaimed Property Act and releases the business from the administrative burden of managing dormant accounts. BCUPS, which was established by the provincial government and Vancouver Foundation in 2003, serves as a central repository of unclaimed property in the province. BCUPS’ staff actively search for the owners of forgotten funds and are dedicated to reuniting money with the rightful owners. They also have avenues for locating owners that companies simply don’t have, such as access to proprietary databases.
BCUPS also maintains a free online database with the names of unclaimed account holders that members of the public can search to see if they have forgotten funds waiting for them.
Currently, the largest unclaimed account in the BCUPS database is worth about $1.9 million.
“Companies have a duty to return forgotten funds to the rightful owners not just because it’s the right thing to do but because it’s legislated under the Unclaimed Property Act,” says Levitz.
Credit unions, debt collectors, real estate agencies, companies in liquidation, municipal and provincial courts and municipalities are required under B.C. law to transfer unclaimed funds to BCUPS if the rightful owners cannot be contacted.
Other organizations holding trust funds, insurance policies, brokerage accounts and closed pension plans are encouraged to voluntarily transfer their unclaimed property accounts to BCUPS if the rightful owners cannot be contacted.
In 2018, BCUPS received more than $6 million in unclaimed funds from financial institutions, companies, courts, tax offices and the Public Guardian and Trustee of British Columbia, and it returned $1.7 million of forgotten funds to the rightful owners at no cost to anyone involved.
For Floyd Murphy, the owner of Murrick Insurance Services Ltd. in Vancouver, turning to BCUPS was an obvious choice a few years ago when his company was trying to track down the beneficiary of a will who was entitled to $50,000.
“We did all kinds of searches; we checked addresses and ads in the papers – no response. We sent the money to BCUPS and within two weeks they had found the individual,” says Murphy.
Not only are the results extremely fast, but also there is no cost to either the company or the recipient of the money.
“It’s a marvellous setup, and there are no losers here.”
BCUPS has a one-of-a-kind philanthropic business model unique in North America. Each year, a portion of the funds under BCUPS’ administration is donated to Vancouver Foundation to support community programs. The foundation directs these funds to high-priority projects such as initiatives to combat the opioid crisis and address homelessness. The donated money is taken from a pool that accrues interest, and thus the necessary funds are always available to whoever rightfully claims their money.
“It’s a win-win for everyone involved,” says Levitz. “Companies can get dormant accounts off their books and help put forgotten funds back in the hands of the rightful owners. In the process, transferring unclaimed funds to BCUPS helps build stronger communities from the ground up in every corner of B.C.”