Dormant Account

Dormant Account: Definition, Process, and How to Reclaim Funds

A dormant account is a financial account that shows no owner-initiated activity for a prolonged period. When an account becomes dormant, the financial institution may be required by state law to transfer the funds to the state as unclaimed property. The state holds the assets in perpetuity and will return them to the owner or heirs on claim.

Key takeaways

• Dormant accounts show no activity for a specified period (varies by state).
• Automatic interest or dividend postings generally do not count as owner activity.
• After the dormancy period, institutions must try to contact the owner; if unsuccessful, funds are turned over to the state (escheatment).
• State treasuries keep unclaimed property indefinitely and will return it on proof of ownership.
• Use national and state search tools to locate and claim unclaimed funds.
• Closing or transacting in the account prevents dormancy; otherwise fees can erode the balance.

What can become dormant

• Checking and savings accounts
• Brokerage and investment accounts (including sold securities; proceeds may be paid in cash)
• Retirement accounts (401(k), pensions)
• Contents of safety deposit boxes (contents may be declared unclaimed property)

What counts as activity

Activity that prevents dormancy typically includes:
* Owner-initiated deposits or withdrawals
Logging into or contacting the financial institution (phone, online)
Receiving a payment from a third party and authorizing its deposit

Automatic postings such as interest or dividends usually do not reset the dormancy clock.

Typical dormancy periods (varies by state)

Dormancy periods differ by state and by account type. Examples:
* California: commonly 3 years for checking, savings, and brokerage accounts
* Delaware: commonly 5 years for similar accounts

Always check the specific state’s unclaimed property rules for exact timelines.

Escheatment: how unclaimed property is handled

Escheatment is the legal transfer of unclaimed property from a financial institution to the state. Key points:
* Companies must report and transfer unclaimed property under state escheatment laws.
States maintain records and return funds to rightful owners or heirs upon claim.
If property was sold (for example, stocks), claimants typically receive the cash value.

How to reclaim money from a dormant account

1. Contact the financial institution first—if the account hasn’t yet been turned over, it can often be reactivated.
2. If the funds are with the state, file a claim with the state treasury or unclaimed property office. Each state has its own claim process and required documentation (ID, proof of ownership).
3. Expect to provide identification and evidence such as account statements, Social Security number, or a record tying you to the account.

Where to search for unclaimed property

• National Association of Unclaimed Property Administrators (NAUPA) provides a free national search tool that covers all 50 U.S. states and other jurisdictions.
• Each state maintains its own searchable unclaimed property database (examples: California, Florida).
  Use official state or NAUPA sites—avoid paid services that charge large fees for filings.

Preventing dormancy and closing an account

• Regularly monitor and log into accounts; update contact information when you move.
• If you no longer need an account, close it and transfer funds to an active account to avoid fees and eventual turnover.
• Contact the financial institution to request account closure and a final balance transfer.

If your bank fails

If a bank fails, accounts may be taken over by another institution or handled by the FDIC. If an account was already inactive, the state might still have a claim. The FDIC provides resources for depositors of failed institutions.

Fees and statute of limitations

• Banks may charge dormant-account or maintenance fees that can reduce the balance over time.
• Most states hold unclaimed property indefinitely; there is generally no statute of limitations for reclaiming funds, though documentation requirements apply.

Bottom line

Dormant accounts do not mean you permanently lose your money. Financial institutions and states follow legal procedures to protect unclaimed assets and to return them to owners or heirs. Regular account monitoring, keeping contact information current, and closing unused accounts are the best ways to avoid dormancy. If you suspect unclaimed funds, search your state’s unclaimed property database or the national NAUPA tool and file a claim with the appropriate office.