Legal Glossary of Terms

Here are the legal terms from the unclaimed property world:

Decedent – A deceased person.

Demutualization – A reorganization, in which a mutual insurance company becomes a stock company. This is accomplished through the payment of stock or cash to policyholders upon the discontinuation of the mutual company. Demutalization has no impact on the actual insurance policy.

Due Diligence – The degree of effort required by law that an unclaimed property holder must exert to find the rightful owner before the property is sent to the state.

Indemnification – An agreement that protects a party from loss by transferring the responsibilities to a third party. Sometimes, this document indemnifies the holder, protecting the holder from liability, and assumes the responsibility to return the property to the owner.

Indemnity Bond – An insurance policy that protects the state from future claims against property once paid to a claimant.

Intangible Property – Property that cannot be held in your hand, something that is abstract, or represented by a symbol. For example, an ownership interest in a company is represented by a stock certificate; a bank balance is represented by a passbook or a statement.

Joint Tenant with Right of Survivorship – Joint ownership. Upon the death of one party, the survivor takes title of all the shares.

Power of Attorney – An authorization to act on someone else’s behalf in a legal or business matter. The person authorizing the other to act is the principal, granter or donor (of the power), and the one authorized to act is the agent, the attorney-in-fact, or in many Common Law jurisdictions, simply the attorney. For some purposes, the law requires a power of attorney to be in writing. Many institutions, such as hospitals, banks and, in the United States, the Internal Revenue Service, require a power of attorney to be in writing before they will honor it.

Probate – The process by which a will is proved to the satisfaction of a judge to be the valid Last Will and Testament of the person who died (also known as decedent).

Reporting Organization – Businesses and organizations may be required to annually review their records and transfer accounts that have reached certain dormancy thresholds to the state, who serves as custodian of the funds until they can be returned to their rightful owners.  Banks, insurance companies, corporations and the courts are among the many examples required to report dormant accounts to their state.

Surety Bond – A surety bond is an insurance policy provided by a rated and regulated insurance company to induce a corporation and its transfer agent to issue replacement certificates in lieu of certificates that have been reported as lost, stolen or destroyed. The fee to obtain a surety bond is usually 2% of the fair market value of the missing securities.

Table of Heirs – A form used, usually in tandem with a Small Estates Affidavit, by surviving blood relatives of a decedent if there was no estate representative appointed by the courts.

Transfer Agent – An agency appointed by a corporation to keep or maintain records of its stock and bond owners and to provide associated services such as dividend payments, proxy tabulation, dividend reinvestment, etc.

Waiver of Probate – Waiver of probate is required when an estate does not go through a court probate process.

Voluntary Compliance – A program that allows banks, businesses, government agencies and other entities to turn over unclaimed assets to all participating states without the fear of penalties or interest. The Voluntary Compliance Program is an attempt to alleviate the reluctance of holders to report their abandoned funds.

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