California Focus: How Californians are being escheated

[WifeOHunkyJohn 2]

Wednesday, July 18, 2007

California Focus: How Californians are being escheated

Accounts or safe-deposit boxes deemed inactive at risk of being looted.

By TOM MCCLINTOCK

Republican state senator from Thousand Oaks

Escheat is a feudal concept that arose from the despotism of the Dark Ages. It stemmed from the principle that property rights depend upon the sufferance of the sovereign, and when a person dies or disappears without heirs, his property reverts to the feudal lord.

California revived this medieval doctrine in 1959 and began seizing personal assets on the smarmy pretext that after a few years of account or safe-deposit box inactivity, property is obviously "lost," and the state needs to "protect" it by selling it off and depositing the proceeds into the general fund.

Today in California, no one's property is safe. When a family sets aside an investment for college or retirement, it may be in for a nasty surprise just three years later. After a lifetime running a small shop, Benny and Sally Fong could have retired on their shares of Warren Buffett's holding company, Berkshire Hathaway, that had grown in value to more than $1 million. But when they tried to redeem their nest egg, they discovered the state Controller's Office had sold the shares – for just $171,000.

When a widow returns to her bank safe deposit box after several years to retrieve her precious heirlooms, she is likely to discover that the controller has already looted it, shredded her family photos and auctioned off anything of monetary value. That's exactly what happened to Carla Ruff, whose great-grandmother's jewelry (appraised at more than $80,000) was taken straight out of her safe deposit box by the controller and sold on eBay for $1,700. Critical financial documents she desperately needed to prepare her dying husband's estate had been shredded.

Don't expect the "protector" of your "lost" property to be glad to see you when you try to redeem what's left. Anne Smith (not her real name) has been trying to reclaim checks the state intercepted from her mother's estate in 2001. After she spent years meticulously documenting her rightful ownership, two months ago the Controller's Office told her she wouldn't get her money back until the company turned over its complete database so the controller could search for additional property to take.

Particularly for claims over $5,000, the controller's office is notorious for stonewalling. When Ronald Repass tried to recover stocks taken from his father's estate – despite notifying the controller beforehand that the stocks weren't abandoned – he was warned that it would take 12 to 18 months to process his claim, and any inquiries would restart the clock. When he finally called after two years of waiting, he was told his claim had been "misplaced."

Controller John Chiang maintains that he's shocked, just-shocked, that his office has been behaving in such a manner, and he wants to do everything he can to set things right, except, apparently, if it reduces the state's revenue. In March, Chiang vigorously opposed legislation to lengthen the escheat period – how long the state must wait before grabbing assets – and to require at least three notices to owners before their property is taken. He is currently sponsoring legislation that would allow him to comb through confidential tax records in search of additional property to seize.

The federal courts have seen through the charade. U.S. District Judge William B. Shubb issued an injunction June 1 halting the practice until the state develops a process that lives up to the pretense that it's only trying to safeguard "lost" property.

The catch is that the better the state does at safeguarding property, the less money it gets to keep, and state officials have grown addicted to the more than half a billion dollars that escheatment brings them every year.

To persuade the judge to lift his injunction, Democratic leaders and the governor's office have drafted a "post-partisan" "reform" that purports to better protect people's property while, in fact, protecting nothing but the state's own revenue. The proof of their intention lies in this simple fact: They plan on receiving the same amount of revenue after enacting the "reform."

It is a classic example of a government that has become destructive of the very rights it was formed to protect.

[WifeOHunkyJohn 2]

From the LA Times which also covered the story [Lost track of those old assets? The state may have seized them - July 9, 2007]:

Getting it back

Think the state may have your money?

California is sitting on $5.1 billion in unclaimed property from dormant bank accounts, safe-deposit boxes and other sources.

To find out whether you are owed any of that bounty, go to the state controller's website at http://www.sco.ca.gov and click on the link for "unclaimed property."

You can also call the controller's office toll-free at (800) 992-4647.

Source: California controller's office

[Ban Hammer 13,346]

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[mawilson 2,133]

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[almaty 19]

california suxs