Nevada Enacts Some Unwelcome Changes to Unclaimed Property Law

For the third time in four years, Nevada has amended its unclaimed property law. Indeed, Assembly Bill 55 was enacted in Nevada on June 2, 2023, and became effective July 1, 2023. The new law impacts the analysis of when certain property types are presumed abandoned. Further, a new certified mailing requirement is added for stocks, equity, retirement accounts or virtual currency valued at $1,000 or more.

Changes to the presumption of abandonment

The criteria to determine when both securities and individual retirement accounts (IRAs) are presumed abandoned have been amended in such a way that some protections for consumers have been scaled back. For both property types, the requirement that the mail be returned to the post office (RPO) before the property is presumed lost has been removed.

Specifically, securities are now presumed abandoned after three years of inactivity. Previously, the property could not be presumed abandoned unless there was either an unclaimed distribution or the account was coded as RPO; both requirements representing credible evidence that an investor was truly lost.

With respect to individual retirement accounts, the new law deems such accounts abandoned three years after the owner reaches the age of mandatory distribution. This is a change from the previous law where IRAs were presumed abandoned three years after the later of RPO or the date the owner reaches 70.5 years of age or confirmation of death. The RPO requirement relating to retirement property is removed. A new provision is added addressing “individual retirement accounts, defined benefit plans or other account or plans which are not tax deferred or tax exempt.” Those accounts are presumed abandoned three years after the date the property becomes distributable. Presumably, this provision relates to Roth IRAs.

Another change to the trigger of dormancy has been made to life insurance property. Under the new law, a life or endowment insurance policy or an annuity contract is presumed abandoned three years after the earliest of (1) the date of death of the insured, (2) the maturity date of the policy or (3) the date the insured would have attained, if living, the limiting age under the mortality table. Previously, the law mirrored the Revised Uniform Unclaimed Property Act of 2016 (RUUPA) provision and looked to the date that the insurance company had knowledge of death. Therefore, the change is to the death component, from knowledge of death to date of death.

These amendments are surprising as they remove provisions commensurate to RUUPA that were added just a few years ago. RUUPA was created as part of a thoughtful, multi-year process that included input from all relevant stakeholders and was designed to provide protections for consumers and shareholders. Nevada’s ULC Commissioners were included in the group that voted for the enactment of RUUPA. It is therefore difficult to reconcile the recent changes that scale back protections originally supported by Nevada.

Due diligence changes

The new law contains two additional requirements that certain Holders may need to comply with related to due diligence. First, for stocks, equity, retirement accounts or virtual currency valued at $1,000 or more, a certified mailing is required. Second, for owners who have consented to receive communications by email, Holders are required to send due diligence by U.S. mail or certified mail and email.

Timetable to comply with changes

Following the enactment of AB 55, the Nevada State Treasurer’s office issued guidance acknowledging that the changes impacting when property becomes reportable do not apply to the fall 2023 reporting due to a cutoff date of June 30, which is before the effective date. The new certified mailing requirement, however, applies to fall 2023 reporting as the time to send due diligence corresponds with the effective date of the law.