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Recent New York Regulation Requires Holders to Confirm Whether Owners are Deceased

Effective March 23, holders of abandoned property for New York owners will have an obligation to “confirm” whether an owner is deceased in some instances. The new regulation does not require holders to perform periodic searches across all accounts, but holders receiving a “notice or indication of death” have 90 days to confirm whether the owner is deceased. Neither the applicable types of “notice” necessary to trigger the search requirement, nor the manner in which the owner’s death is to be “confirmed”, are specified by the regulation.

Authors

Michael Rato

Many holders may elect to use the Social Security Administration’s Death Master File (DMF) to perform these confirmations. Unfortunately, the accuracy of the DMF has been called into question in recent years.1 The regulation does not explicitly provide any protection for holders who erroneously report property as “abandoned” based upon inaccurate information in the DMF.

Compounding this uncertainty, the impact of a confirmed owner death on the dormancy period may be problematic in some circumstances. The Regulatory Impact Statement submitted during the proposed rule’s comment period provided that "[u]pon confirmation of death, the dormancy period will start to run." Accordingly, holders that confirmed owner death would likely have had several years before having to report and remit the funds to the NY Office of Unclaimed Funds (OUF) in order to locate beneficiaries.

The text of the rule, however, provides that upon confirmation of the owner's death by the holder, the dormancy period will be deemed to "commence on the date of death" -- not the date upon which the holder receives notice, nor the date that the holder confirms the death. While this discrepancy may not be significant where the holder receives notice of an owner's death promptly, there could be situations where notice may be delayed for months or even years. For example, if a holder does not receive notice of an owner death for several years (e.g., after the dormancy period expires, as measured from the date of death) there is the possibility that an item would be deemed "late" even though the holder only recently received notice of the death.

It is unclear whether the regulation will be amended to correct this discrepancy, or if the Office of the State Comptroller will issue guidance. In the interim, however, holders may want to carefully assess the credibility of the source of their “notice” that an owner is deceased, and make outreach attempts relating to the property in lieu of simply relying on the DMF to trigger dormancy. In addition, given that the New York APL provides that interest “shall” be assessed when reported late, holders who are reporting property that appears to be late because of a late death notice are best advised to seek a waiver of interest from the OUF.

  1. Levin MA, Lin HM, Prabhakar G, McCormick PJ, Egorova NN. Alive or dead: Validity of the Social Security Administration Death Master File after 2011. Health Serv Res. 2019 Feb;54(1):24-33. doi: 10.1111/1475-6773.13069. Epub 2018 Dec 5. Erratum in: Health Serv Res. 2019 Jun;54(3):722. PMID: 30520023; PMCID: PMC6338290.

Client Alert 2023-082

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