AB563: Bill Text

LRB-3506/4

RJM&PJK:cjs:ch

2001 - 2002 LEGISLATURE

2001 Assembly BILL 563

October 11, 2001 - Introduced by Representative Gundrum, cosponsored by Senator George. Referred to Committee on Government Operations.

AB563,1,9 An Act to repeal 863.37 (2) (b) and 863.39 (3) (b); to renumber and amend 863.37 (2) (a); to amend 177.02 (1), 177.06 (3) (b), 177.07 (1) and (3) (b) 3., 177.10 (5), 177.12 (1), 177.17 (4) (a) 1., 177.22 (1), 177.22 (4), 177.23 (1), 177.34 (1) to (3), 852.01 (3) and 863.39 (3) (a); to repeal and recreate 177.10 (1) (intro.), 177.10 (1) (a) and (b) and 177.10 (2) and (3); and to create 863.39 (3) (bm) of the statutes; relating to: abandoned property reporting requirements; reporting and delivery of abandoned stock, intangible business interests, and other intangible property to the state treasurer; the sale of abandoned property; and creating a procedure for claiming certain escheated funds.

Analysis by the Legislative Reference Bureau

Uniform Unclaimed Property Act

Under Wisconsin's version of the Uniform Unclaimed Property Act (UUPA), certain types of property are presumed to be abandoned if the owner of the property fails to take steps to evidence ownership within a specified time period (dormancy period). For example, a stock or other intangible ownership interest in a business association is generally presumed to be abandoned if the business association pays out at least five dividends or other sums as a result of the ownership interest during a five-year period and the dividends or sums are unclaimed by the owner. Current law, however, does not contain a presumption of abandonment applicable to stocks or ownership interests that do no pay dividends or other sums.

With certain limited exceptions, the holder of property that is presumed to be abandoned must report and deliver the property to the state treasurer (treasurer) before November 1 of each year. The report must cover the previous calendar year. Before July 1 of each year, the treasurer must publish a list containing the names of persons appearing to be owners of abandoned property. With certain limited exceptions, the treasurer must sell the property within three years after the date on which the treasurer receives the property. If the property is a security other than a stock (for example, a stock option or an interest in a limited partnership), the treasurer must hold the security for at least one year before selling it, unless it is in the best interest of the state to do otherwise. With certain limited exceptions, the treasurer currently deposits the clear proceeds of the sale of delivered property in the school fund.

Persons claiming an interest in any abandoned or unclaimed property delivered to the treasurer may file a claim with the treasurer to obtain the property. If a claim is allowed, the treasurer generally must deliver the property to the claimant or pay the claimant the amount the treasurer actually received or the net proceeds of the sale of the property, plus certain amounts for dividends or interest accruing to the property.

This bill shortens to three years the dormancy period that applies to a stock or other intangible ownership interest in a business association and changes certain other criteria for determining whether these items of property are presumed to be abandoned. Under this bill, a stock or other ownership interest is presumed abandoned if the owner, for more than three years, fails to claim a dividend, distribution, or other sum payable as a result of the interest and if the business association does not know the location of the owner at the end of this three-year period. The bill also creates a presumption of abandonment applicable to stock and other ownership interests that do not pay dividends or other sums. Thus, under the bill, these ownership interests are presumed abandoned if the owner, for more than three years, fails to communicate with the business association regarding the ownership interest and if the business association does not know the location of the owner at the end of this three-year period. The return of official shareholder notifications or communications by the U.S. postal service as undeliverable is evidence under the bill that the business association does not know the location of the owner.

This bill also creates a new presumption of abandonment applicable to a stock or other ownership interest that is enrolled in a plan that provides for the automatic reinvestment of dividends, distributions, or other sums payable as a result of the ownership interest. Under this bill, these ownership interests are presumed abandoned if more than three years have elapsed since the location of the owner became unknown to the association, as evidenced by the return of official shareholder notifications or communications by the U.S. postal service as undeliverable. Currently, these ownership interests are presumed abandoned only if the same owner has certain other ownership interests in the same business association that are also presumed abandoned under the five-year dormancy period.

In addition, this bill changes the default dormancy period for intangible property from five years to three years, changes the dormancy period generally applicable to life insurance proceeds from five years to three years, and changes the requirement that a public sale of abandoned property be held every three years so that the sale must be held every five years (or more frequently, in the discretion of the treasurer). This bill also changes the abandoned property reporting requirements so that the required annual report covers the fiscal year (July 1 to June 30) rather than the calendar year (January 1 to December 31). This bill also grants the treasurer discretion to require a person who fails to timely pay or deliver abandoned property to forfeit interest at the annual rate of 18%. Current law requires the person to pay this interest.

Escheated property

Under current law, if there are no heirs of a decedent in an intestate estate (an estate in which the decedent did not leave a will), or if a legacy or distributive share in an estate cannot be paid to the distributee or is not claimed by the distributee within 120 days after entry of the final judgment, the property escheats to the state and is paid or delivered to the treasurer. The treasurer must publish notice at least annually in the official state newspaper with such information as the name of the decedent, the time and place of death, the amount paid to the treasurer, and how a person may make a claim against the escheated property. Within ten years after the notice is published, a person may make a claim against the escheated property by filing a petition with the probate court that settled the estate and by sending copies of the petition to DOR and the attorney general. If the person establishes his or her claim in a court hearing, the court certifies the claim to DOA, which audits the claim; issues an order for any death tax due; and issues an order distributing the estate. The treasurer pays the claim.

The bill changes this procedure somewhat. A person filing a petition with the probate court must send a copy of the petition to the treasurer, instead of to DOR; the court is no longer required to certify a claim to DOA, which is no longer required to audit claims; and the court is no longer required to issue an order for any death tax due.

The bill also provides a new, optional procedure for making a claim against escheated property. The new procedure is similar to a procedure under current law for claiming abandoned property by filing a claim with the treasurer, except that under the new procedure the value of the claimed escheated property may not exceed $5,000. Rather than filing a petition with the probate court, a person claiming escheated property of $5,000 or less may, within ten years after publication by the treasurer of notice regarding the estate and the escheated property, file a claim with the treasurer, who must consider the claim within 90 days after filing. If the treasurer allows the claim, the treasurer must provide written notice to and obtain the written consent of the attorney general and file written notice of the allowed claim, as well as the written consent of the attorney general, with the probate court that settled the estate. After the necessary filings, the probate court must issue an order requiring the treasurer to pay the claim. If the treasurer does not act on a claim within 90 days after the claim is filed, or if the treasurer disallows a claim, the person filing the claim may file an action in the probate court that settled the estate to establish the claim.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB563, s. 1 Section 1. 177.02 (1) of the statutes is amended to read:

AB563,4,6 177.02 (1) Except as otherwise provided in this chapter, all intangible property, including any income or increment derived from it, less any lawful charges, that is held, issued or owing in the ordinary course of a holder's business and that has remained unclaimed by the owner for more than 5 3 years after it became payable or distributable is presumed abandoned.

AB563, s. 2 Section 2. 177.06 (3) (b) of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read:

AB563,4,11 177.06 (3) (b) Assess a service charge after December 31 June 30 of the calendar year covered in in which the report concerning that property is required to be filed under s. 177.17 concerning that property.

AB563, s. 3 Section 3. 177.07 (1) and (3) (b) 3. of the statutes are amended to read:

AB563,4,18 177.07 (1) Funds held or owing under any life or endowment insurance policy or annuity contract that has matured or terminated are presumed abandoned if unclaimed for more than 5 3 years after the funds became due and payable as established from the records of the insurance company holding or owing the funds, but property described in sub. (3) (b) is presumed abandoned if unclaimed for more than 2 years.

AB563,5,6 (3) (b) 3. Neither the insured nor any other person appearing to have an interest in the policy within the preceding 2 3 years, according to the records of the company, has assigned, readjusted or paid premiums on the policy, subjected the policy to a loan, corresponded in writing with the company concerning the policy or otherwise indicated an interest as evidenced by a memorandum or other record on file prepared by an employee of the company.

AB563, s. 4 Section 4. 177.10 (1) (intro.) of the statutes, as affected by 2001 Wisconsin Act 16, is repealed and recreated to read:

AB563,5,12 177.10 (1) (intro.) Except as provided under sub. (5), a stock, shareholding, or other intangible ownership interest in a business association that is evidenced by records available to the association is presumed abandoned if all of the following apply:

AB563, s. 5 Section 5. 177.10 (1) (a) and (b) of the statutes are repealed and recreated to read:

AB563,5,16 177.10 (1) (a) The interest in the association is owned by a person who for more than 3 years has failed to do any of the following:

AB563,5,18 1. Claim a dividend, distribution, or other sum payable as a result of the interest.

AB563,5,22 2. Communicate with the association regarding the interest or a dividend, distribution, or other sum payable as a result of the interest as evidenced by a memorandum or other record on file with the association prepared by an employee of the association.

AB563,6,2 (b) The association does not know the location of the owner at the end of the 3-year period under par. (a). The return of official shareholder notifications or communications by the U.S. postal service as undeliverable is evidence that the association does not know the location of the owner.

AB563, s. 6 Section 6. 177.10 (2) and (3) of the statutes, as affected by 2001 Wisconsin Act 16, are repealed and recreated to read:

AB563,6,5 177.10 (2) This section applies to all of the following:

AB563,6,7 (a) The underlying stock, shareholdings, or other intangible ownership interests of an owner.

AB563,6,10 (b) Any stock, shareholdings, or other intangible ownership interest of an owner when the business association is in possession of the certificate or other evidence of ownership.

AB563,6,13 (c) The stock, shareholdings, or other intangible ownership interests of dividend-paying business associations and business associations that do not pay dividends, whether or not the interest is represented by a certificate.

AB563,6,15 (3) The business association is the holder of any property presumed abandoned under this section.

AB563, s. 7 Section 7. 177.10 (5) of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read:

AB563,7,5 177.10 (5) This chapter section does not apply to any stock or other intangible ownership interest enrolled in a plan that provides for the automatic reinvestment of dividends, distributions, or other sums payable as a result of the interest unless the records available to the administrator of the plan show, with respect to any intangible ownership interest not enrolled in the reinvestment plan, that the owner has not within 5 years communicated in any manner specified under sub. (1) more than 3 years have elapsed since the location of the owner became unknown to the association, as evidenced by the return of official shareholder notifications or communications by the U.S. postal service as undeliverable, as provided under this subsection. The 3-year period from the return of official shareholder notifications or communications begins at the earlier of the return of the 2nd of those notifications or communications or the date on which the holder discontinues mailings to the owner.

AB563, s. 8 Section 8. 177.12 (1) of the statutes is amended to read:

AB563,7,12 177.12 (1) Intangible property and any income or increment derived from it held in a fiduciary capacity for the benefit of another person is presumed abandoned unless the owner, within 5 3 years after it has become payable or distributable, has increased or decreased the principal, accepted payment of principal or income, communicated concerning the property or otherwise indicated an interest as evidenced by a memorandum or other record on file prepared by the fiduciary.

AB563, s. 9 Section 9. 177.17 (4) (a) 1. of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read:

AB563,7,18 177.17 (4) (a) 1. Before November 1 of each year, each holder shall file a report covering the previous calendar year 12 months preceding July 1 of that year. On written request by any person required to file a report, the administrator may extend the deadline established in this paragraph.

AB563, s. 10 Section 10. 177.22 (1) of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read:

AB563,8,7 177.22 (1) Except as provided in subs. (2) and (4), the administrator, within 3 years after the receipt of abandoned property, shall sell it abandoned property delivered to the administrator under s. 177.06 (4) and 177.17 (4) (a) 2. to the highest bidder at public sale in the city, village or town in this state which, in the judgment of the administrator, affords the most favorable market for the property. The sale shall be held whenever the administrator deems appropriate, but at least once every 5 years. The administrator may decline the highest bid and reoffer the property for sale if, in his or her judgment, the bid is insufficient. If the administrator determines that the probable cost of sale exceeds the value of the property, it need not be offered for sale. Any sale held under this section shall be preceded by the publication of one notice, at least 3 weeks in advance of sale, in a newspaper of general circulation in the county in which the property is to be sold.

AB563, s. 11 Section 11. 177.22 (4) of the statutes, as affected by 2001 Wisconsin Act 16, is amended to read: