Texas has been quite active in amending its unclaimed property statute. Not long ago, it enacted Texas House Bill 3598 (HB 3598), which amended the manner in which holders report property to the state. Additional revisions were recently made to the statute, focusing on a number of other subjects in Texas House Bill 1514.
Texas House Bill 1514 (HB 1514) was signed into law and made effective on May 18, 2021 by Governor Greg Abbott. With this enactment, the state made several revisions to its unclaimed property statute that impacted life insurance, due diligence, penalties and interest assessments, amongst several other topics. Although the revisions were not as gargantuan as several other states adopting provisions of the Uniform Law Commission’s Revised Uniform Unclaimed Property Act (RUUPA), HB 1514’s revisions are monumental in their own right.
HB 1514’s provisions provide clarification in some areas and updates in others. The primary areas of implication(s) with this bill are exhibited as follows:
- Life insurance proceeds
- Worthless/non-transferable securities
- Due diligence timing and delivery
- Flexibility to waive penalties and interest
- Claimants’ representatives notices
Life insurance proceeds
HB 1514 includes a provision that changes the filing date for insurance properties from November 1 to July 1 annually. This provision brings filing date uniformity, as now all property types are reportable on the same due date.
Since the bill was enacted after this year’s filing due date, Texas insists that holders file insurance properties that would have been reportable on November 1, 2021 on July 1, 2022.
This means you will skip the November 1, 2021 filing and hold those properties to report on July 1, 2022.
Holders are no longer required to report worthless and/or non-transferable unclaimed securities. Historically, transfer agents, as well as self-reporting holders, have struggled with the reporting of worthless and non-transferable securities due to the lack of value. The property can be reported, however, no actual funds can be submitted.
Due diligence timing and delivery
Recognizing the maturity of the digital age, HB 1514 provides that holders are now allowed to send due diligence notices by email or first class mail. Prior to the enactment, holders were required to send tangible, written correspondence to the owner via mail. Additionally, the statute revised the due diligence mailing timeline by changing from a mail date of on or prior to May 1, to 60 days before the property is delivered to the State Comptroller. This sets the deadline for due diligence to May 2.
Claimant’s representatives notices
Transparency and clarification were priorities with the bill’s enactment. In the case of claimant representatives, the act now requires extensive content to be provided in the solicitation process for recovery efforts. The representative is now required to provide the property type, the property’s value and the fee that will be assessed for assisting with the claim. While this does not materially impact the holder per se, it does impact the approach the representative will have to take in outreach attempts.
Flexibility to waive penalties and interest
As most holders are aware, Texas’ penalty and interest assessments on past due unclaimed property have historically been one of the highest in the country. Attempts to obtain full or partial waiver of the assessment were far fetched under most circumstances.
The updated language now exhibits flexibility on Texas’ part to waive penalty and interest. Holders should be mindful that this flexibility may be subjective in nature, however, the opportunity to present a case for leniency is welcomed.
Texas House Bill 1514 Summary
While this bill doesn’t make the extensive changes that other RUUPA bills in this session have made, it is worth taking a moment to review and ensure you are up-to-date on all changes. The bill is most impactful to life insurance companies that should make sure to comply with the new report due date requirement. For all holders, the increased ability to request a waiver of fines and penalties is a good thing. Of course, we hope you are able to stay compliant and never face fines and penalties for any state. As always, we will do our part to keep you current on new legislation.
By: Danielle Herring and Gary Joseph
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