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What does a bank typically do when the account owner dies, and nobody came to claim the money?

Do they leave the money in that account ad vitam aeternam, or does it get collected and used at one point by the bank?

Although the question is non country-specific it would be interesting to know how it happens in USA and Canada for comparison.

Because it just seems to be that it would be a big waste to keep that money there.

  • What country are you referring to? Property laws vary greatly between countries. – D Stanley Feb 9 '18 at 16:46
  • I figured, but the question was non country-specific. Thanks a lot for your answer, it helps clarify the process. Perhaps I would also be interested on how Canada does it. – Wadih M. Feb 9 '18 at 16:50
  • @Wadish Glad it helped. If you want to know how Canadian laws apply, then add that to your question (or ask a new one) and tag is as "Canada" to target your audience. – D Stanley Feb 9 '18 at 17:05
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    @DJohnM Perhaps by checking the inactivity on an account for more than X number of years. – Wadih M. Feb 9 '18 at 17:11
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    @WadihM. And why would the bank spend time or money doing this? Why do you think they care if they're holding money in an account not being used? If anything, its to their benefit; that's how banks work. Money you deposit for savings is loaned out to other customers. The amount of deposits they hold directly impacts how much they are allowed to lend. – Andy Feb 10 '18 at 17:38
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In the US, this is mostly governed by state law, with some federal oversight. (if your question pertains to a different country I will delete this answer)

The estate owns the account upon the owner's death. The bank is required by the SEC to make reasonable attempts to notify the account holder, and ultimately report the unclaimed property after a period of time determined by state law (typically 5 years). If the estate fails to claim the property, it then becomes property of the state (is escheated) and falls subject to the unclaimed property laws of the state. The laws vary from state-to-state, but typically the owner (estate) can file a claim to the money that the state must honor if the identity can be verified.

The bank holding the money cannot take ownership through any process that I am aware of.

  • Comments are not for extended discussion; this conversation has been moved to chat. – JohnFx Feb 9 '18 at 20:22
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In Canada, the Banking Act RSC 1991, c.46 regulates most banks (except for provincially-created credit unions and caisses populaires.) There are two sections that deal with unclaimed balances: s. 438 (for domestic banks) and s. 557 (for foreign banks).

From the Bank of Canada's unclaimed balances site:

When there has been no owner activity in relation to the balance for a period of ten years, and the owner cannot be contacted by the institution holding it, the balance is turned over to the Bank of Canada, which acts as custodian on behalf of the owner. Balances are transferred to the Bank of Canada once a year, on 31 December.

The Bank of Canada holds unclaimed balances of less than $1,000 for 30 years, once they have been inactive for ten years at the financial institutions. Balances of $1,000 or more will be held for 100 years once they are transferred to the Bank of Canada.

If the balance remains unclaimed until the end of the prescribed custody period, the Bank of Canada will transfer the funds to the Receiver General for Canada.

The original bank is required to send a notice to the account holder on January of the 2nd, 5th, and 9th years after the account has gone dormant (ss. 439(1), 558(1)), and interest is accrued until the account is transferred to the Bank of Canada (ss. 438(1), 557(1)). After the 30 or 100 years (depending on the amount) are up, the federal government receives the money and it goes into general revenue.

Credit unions are different, as provincial legislation affects them. For example, in Alberta the Credit Union Act RSA 2000, c. C-32, s. 117, requires credit unions to notify the account holder after 12 months and 2 years, after which the money goes into the credit union's unclaimed money account (s. 117(2)). If the amount is less than $100, after 5 years the credit union can claim the money (s. 118(5)); otherwise, after 20 years the provincial government receives the money and it goes into general revenue (s. 120(6)). Other provinces will have similar provisions.

  • Just curious (interest isn't mentioned on the unclaimed balances link): once transferred to Bank of Canada, do balances continue to accrue interest, and – if so – could this push a sub-$1,000 (30-year) account into a 100-year one? – TripeHound Mar 14 '18 at 7:54
  • @TripeHound You don't receive interest after the initial 10-year period. – ErikF Mar 14 '18 at 10:56

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