The amount of unclaimed property in Kentucky has been steadily increasing over the past few years, with Madison County alone accounting for millions in unclaimed property.
According to State Treasurer Mark H. Metcalf, Kentucky started 2023 with $832 million in unclaimed property accounts, up from $800 million previously.
The amount of unclaimed property in Madison County alone is $5.7 million.
The Treasurer expects Kentucky to reach $1 billion in unclaimed property funds within the next 5-6 years.
What is “unclaimed property”?
Unclaimed property refers to financial assets or belongings that have been left inactive or unclaimed by the owner for a certain period (usually three years), after which, such assets are relinquished to the Treasury to safeguard.
This intangible unclaimed property includes property such as stock, bonds, and cash deposits that the owner cannot be found for, typically due to unclear succession or communication issues after the initial owner passes away.
According to Metcalf, Kentucky does not favor “escheatment” of unclaimed property, meaning the state prioritizes returning the property to the rightful private owners rather than keeping it for the state.
How does it work?
Metcalf explained that there have been people all over the state who have been vested unexpected monies they were owed.
His office returned $1.9 million to an estate just this month. Last month, they returned $717,000 to another estate. They have even returned 16 cents to a taxpayer.
“We attempt to be thorough and complete in terms of making sure that every penny that’s due to a taxpayer is refunded to them when it’s shown that we owe them money,” Metcalf said. “The whole idea here is to put private property back into the hands of its owners...We don’t want people’s private property. We want them to have it and use it as they want to use it, not as we want to use it.”
Any unclaimed property received is not subject to income tax, noted the Treasurer; however, it is subject to withholding.
Metcalf stated, “What we’ll do inside the Treasury is we’ll see if the person who’s receiving the money owes income taxes. If they do, then we will withhold those income taxes. Starting September 1, we will be withholding for child support as well, so our staff in unclaimed property will look to see if taxes are due or whether the recipient of the Unclaimed Property award owes child support. Hopefully, this time next year, we’ll also be withholding for crime victims, restitution, and reimbursement.”
The Treasurer says these efforts are meant to ensure that his office remains to act as “good stewards” of the funds and better the Commonwealth.
What happens to the money if it is unclaimed?
Any unclaimed property funds that are not immediately able to be returned to taxpayers are placed in the state’s depository institution and invested back into the state by the Kentucky State Investments Commission, which is chaired by the State Treasurer.
These monies, along with funds obtained from sources like the Kentucky Lottery Board, may be invested in the following investment categories:
The Short-term pool consists primarily of general fund cash balances and provides liquidity for the remaining investment pools;
The Intermediate-term Pool represents agency fund investments, state-held component units, and fiduciary fund accounts;
The Long-term Pool, which invests the budget reserve trust fund account and any other funds deemed appropriate for the pool where the need for liquidity is not a serious concern;
The Bond Proceed Pool in which capital construction bond proceeds are invested
“We get back a dividend on our investments, and we spend that on public purposes,” noted Metcalf.
The investment returns, which Metcalf estimated at $654 million last year, are used to fund public purposes in Kentucky rather than being kept by the state.
This can include KEES funding for students in 4-year colleges and trade schools; scholarships for young men and women serving in the military; funding for K-12 education; such as building schools and libraries; road projects and other infrastructure.
“Now what does that mean for Kentucky? For every dollar that we generate from our investments, that’s one less dollar we have to generate through tax revenue, and that’s one less dollar we have to cut from a budget. So the whole idea here is to make these two very fine entities, the Treasury and the Lottery Commission, responsive to the needs of Kentuckians,” explained Metcalf.
How to locate unclaimed property
Through the Treasurer’s Division of Unclaimed Property, a record $12,488,310.05 has been awarded to Kentuckians since Metcalf took office on January 1, 2024.
Check the treasury.ky.gov website to search for any unclaimed property that may be owed to you or your family members. There is no charge to search for and claim unclaimed property.