The California Unclaimed Property System: From Protector to Parasite

A Radical Transparency White Paper

1. What Is Unclaimed Property?

Money Can Lose Its Connection to Its Owner

A forgotten bank account. A refund check that never gets cashed. An insurance benefit that a family doesn’t know about. These are everyday ways that property can become unclaimed.

In plain language, unclaimed property is money or other assets held for someone else when the owner has had no qualifying activity or contact for a legally defined period.[30]

Unclaimed Property Types

SAVINGS

Bank Accounts & CDs

A forgotten checking or savings balance, or a certificate of deposit (CD).

PAYMENTS

Uncashed Checks & Money Orders

Money issued to someone that was never collected, such as a paycheck or refund.

INSURANCE

Benefits & Refunds

Amounts due from life insurance policies or annuities, and refunds of insurance premiums.

VALUABLES

Safe-Deposit Box Contents

Physical items such as jewelry, family heirlooms or documents left in a safe-deposit box.

DEPOSITS & CREDITS

Money Owed Back to You

Utility deposits, rental security deposits and credit balances on an account.

INVESTMENTS

Stocks, Mutual Funds, Bonds & Dividends

Investment holdings and dividend payments can become unclaimed when the owner loses contact with the institution holding them.

Source for the property-type overview: State Controller’s Office.[33]

How Does the Owner Connection Break?

Often, an ordinary life event separates people from their money. The owner may forget the asset, miss a payment or never know the asset exists.

A Move

Someone relocates and forgets to update a mailing address. A refund or account notice goes to the old home.

A Gap Between Generations

An owner dies, and heirs do not know about a bank account or life insurance policy.

A Major Life Change

A name change after marriage or divorce, or the closure of a business, can interrupt the paper trail.

Forgetfulness

A small utility deposit, an old gym refund or a stock-option payout gets overlooked.

That raises the next question: why do states step in, and what are they supposed to do with property that belongs to someone else?

2. Why and How Do States Manage Unclaimed Property?

Escheatment: When the State Steps In

When an owner loses contact with money or property, the organization holding it does not simply get to keep it. Unclaimed property laws provide a process for transferring it to the state. That transfer is commonly called escheatment. The process generally begins after a period without qualifying owner activity or contact, known as the dormancy period. The waiting period and required steps depend on the property and the applicable law. In California, the State Controller takes custody of unclaimed property under this process. The state’s role is to safeguard the owner’s claim and help reconnect the property with its rightful owner or heirs.

Two Meanings of Escheat

The distinction is whether the owner retains the right to reclaim the property.

CUSTODY

Temporary (Custodial) Escheat

The state takes custody while preserving the rightful owner’s claim.

The state’s role
Act as a custodian, holding the property for the benefit of its owner.
The owner’s rights
The rightful owner or heirs can come forward to claim it without a deadline under California’s unclaimed property program.[6]
What can be returned
The property or, if it has been sold under the applicable rules, the cash proceeds. Custody does not guarantee that the original item will remain available.[4]
OWNERSHIP

Permanent Escheat

The state ultimately takes ownership, and the former right to reclaim the property ends.[32]

The state’s role
Become the owner through the applicable legal process.
The owner’s rights
Once escheat becomes final under that process, the prior right to recover the property is extinguished.
When it can arise
An estate may pass to the state when someone dies without a valid will or anyone legally entitled to inherit. This is a separate process, not an automatic consequence of forgetting an account.

Protect Owners and Benefit the State: A Conflict of "Co-Equal" Interests

Escheatment was originally intended to protect consumers from banks and other entities that tended to maintain abandoned assets for their own use instead of tracking down the rightful owners. The founding premise was distrust of private holders that were quietly keeping other people's money.

Over time, the escheatment rationale also added a public benefit: to give states the benefit of property use while it remains unclaimed. This dual mandate creates a fundamental conflict of interest, especially if one objective overtakes the other.[3][34]

Protect the Owner

Locate people who may not know they have unclaimed property, preserve their right to claim it, and return what they are owed.

Benefit the State

Allow the public, through the state, to benefit from funds that remain unclaimed while retaining the obligation to pay valid claims.

Those objectives create a tension: returning money serves the owner, while money that stays unclaimed remains available for the state’s use. The question for California is how its system balances those interests in practice.

3. Our Unclaimed Property System Has Become a Parasite

What Is a Parasite?

A parasite lives on or inside another organism (the host) and feeds at the host’s expense. Parasitic infections can cause injury and illness; some can be fatal.[1] The analogy in this paper is economic: the unclaimed property system sustains itself by drawing value from the people it’s supposed to protect. The state gains use of property while owners lose access to it, receive no interest on paid claims, and lose future investment growth when securities are sold.

When the State Benefits From Property Staying Unclaimed

California is responsible for returning property to its owners while its budget benefits from property that remains unclaimed.[35]

PROPERTY AWAITING OWNERS$15.485+ billion

Value Held in the Program

Reported in the Assembly’s February 2026 resolution, HR 79. One of the largest totals in the country.[10]

BUDGETED ANNUAL REVENUE$1.96 billion

Abandoned-Property Revenue

Estimated for 2026–27 in California’s enacted budget.[2]

Dormancy Period Is Decreasing

California shortened the dormancy period for checking accounts from 15 years to three. Each reduction narrowed the period without qualifying owner activity or contact before the account could enter the unclaimed-property process.[3]

Checking-account dormancy periods · bar lengths show years, not time between legislative changes
Before 197615 years
19767 years
19885 years
19903 years

Small Balances Fall Below the Mailed-Notice Threshold

The Controller’s statutory requirement for an individualized mailed notice starts at $50. Below that threshold, the mailing requirement does not apply.[31]

Under $50

No Mailed Notice Required

As of September 2026
65.2 million records$686.2 million total
$50 or more

Mailed Notice Required

Notices go to the reported address, or a different address supplied by the Franchise Tax Board. When a Social Security number is reported, the Controller must request an updated address.[31]

Your Property Keeps Earning for California, but Stops Earning for You

SECURITIES18–20 months

California requires unclaimed securities to be sold 18–20 months after the holder’s report is filed. Sale proceeds enter the Abandoned Property Account, and most are transferred to the state’s General Fund each month.

An owner who comes forward after the sale receives only the net sale proceeds. Appreciation and dividends from the sold investment are lost to that owner. The right to reclaim cash survives; the opportunity to keep growing that investment ends.[4][5]

INTEREST ON CLAIMSNo interest

California stopped paying owners interest in 2003 under AB 1756. Current law provides no interest on claims paid.

Money can remain in state custody for years without earning interest for its owner.[3][6]

Unclaimed Property Law Now Extends to Digital Assets

SB 822, effective January 1, 2026, clarified that digital financial assets now fall within the Unclaimed Property Law. It sets notice and transfer rules for cryptocurrency and other digital assets held by businesses, including a three-year period tied to specified contact or ownership conditions. After the state converts a digital asset to cash, the claim is for net sale proceeds.[4][7]

A System That Rewards Collection and Profits From Retention

Taken together, these policies reveal a system heavily tilted toward property collection and retention: shorter dormancy periods move property into state custody sooner; digital-asset rules extend its reach; and contingency-fee auditors have a financial incentive to find unreported property. Meanwhile, a very large number of small balances fall below the Controller’s individualized mailing threshold, securities are sold, and owners receive no interest on paid claims.

Collection From Holders Has Financial Incentives

California’s rules allow the Controller to hire private bounty hunters (called ‘auditors’ to obscure their role) and pay them up to 11% of unclaimed property they recover from holders. This creates a financial incentive to bring more property into state custody.[8][37][38]

Owner Recovery Has Lagged Behind

In its 2015 review, the Legislative Analyst’s Office reported that, over the preceding 20 years, California returned an average of roughly $4 for every $10 it collected.[3] That historical imbalance left far more flowing in than flowing back to owners.

4. Malia Cohen Is Making It Worse

Behind the thin veil of what her office calls a “broader effort to modernize California’s Unclaimed Property Program,”[12] current State Controller Malia Cohen is quietly sponsoring legislation[14] that, if enacted, would make California “the most aggressive state in the country for escheating securities.”[13][15]

Cohen’s public message emphasizes returning property. The test of that message is whether recovery is catching up with accumulation, and whether her legislative agenda protects owners from losing their investments in the first place.

The Parasite Has Grown on Her Watch

The Controller’s December 2022 report, issued at the end of Betty Yee’s administration, put holdings at $11.2 billion across 64 million properties. The Legislature’s February 2026 resolution reported more than $15.485 billion and 93.6 million properties.[9][10]

Reported property value held
December 2022$11.2 billion
February 2026$15.485+ billion

About 38% higher

Reported number of properties held
December 202264 million
February 202693.6+ million

About 46% more

The inventory awaiting recovery has grown by roughly 29.6 million properties and $4.3 billion between these reports. That is the scale against which Cohen’s recovery efforts should be judged.

Her Publicity Says Progress. The Numbers Tell a Different Story

Malia Cohen’s Public Unclaimed Property Reunification Announcements

  1. JACL, San Francisco

    $24,087

    Press release [19]

  2. All 58 counties

    $2,300,000

    Press release [18]

  3. Special districts

    $181,728

    Press release [20]

  4. Orange County and 12 cities

    $241,983

    Press release [21]

On June 4, 2026, the Controller reported that a December 2025 initiative had sent more than 100,000 letters and returned more than $30.4 million. A second round was to reach about 130,000 people. Tax-record matching identified recipients, who still had to use a claim code to verify their information and complete the online process to receive payment.[12]

About $15 billion heldBalance reported in the June 2026 announcement
About $2.75 million returnedFour announcements combined · ≈0.018%
$30.4 million+ returnedFirst outreach round · ≈0.20%
The blue rectangle represents approximately $15 billion held. Each orange square represents its labeled return amount on the same area scale. The four announcements above total $2,747,798; the first outreach round reported more than $30.4 million returned. These are separate comparisons, not an audited total of unique payments or all program returns.

These activities put a public face on unclaimed property recovery, but the total impact is extremely small when compared with the size of the problem and its growth rate.

HR 20 and HR 79 recognized Unclaimed Property Month and promoted the existing service, with no new recovery funding or performance target.[10][11]

Some Owners Need Headlines to Recover Their Property

Recovery Should Not Require an Investigative Journalist’s Report

CBS found unclaimed funds for food banks ($95,000+), children’s hospitals ($1.3 million+), and Make-A-Wish ($46,000+).

“It’s my money?” asked Karen Baker of the Yolo County Food Bank when told about its funds. “It would seem like it would be much more proactive to just send us the information, or better yet, send us a check of all unclaimed funds,” Baker said.

“The burden shouldn’t be primarily on the owners to find and claim their property,” Ron Lizzi told CBS News. “It should be primarily on the state to return what it reasonably can.”[23]

Doug Brown sought $18,000 from his father’s estate for his mother and brother, a veteran with medical needs. As of the June 2026 CBS report, recovery remained unresolved.[27]

AB 1447: Let Your Investments Mature — and Risk Losing Control of Them

A savings or investment account can be quiet because its owner is following a “buy and hold” plan. Cohen-sponsored AB 1447 allows the State to take investments after three years of owner inactivity, even when mail still reaches them.[13][14]

Who Is at Risk?

The coalition opposing AB 1447 identifies these groups as exposed to premature transfer and liquidation:[15]

  • Retirees and buy-and-hold investors: years without trading or contacting a broker can reflect the investment strategy itself.
  • Deployed service members: demanding assignments can interrupt communication with financial institutions.
  • Parents saving for college: investments may be left to grow until a child needs them.
  • People living abroad and heirs: distance or an unsettled inheritance can delay active management.

The coalition warns that AB 1447 could cause your property to be declared ‘unclaimed’ even when statements and tax documents still reach you.[15] Holding an asset for the long term should not become a recurring obligation to defend it from the state.

Cohen inherited a parasite, and she’s feeding it aggressively. AB 1447 widens the path for privately owned investments to enter state custody and the liquidation process.[13][14] Meanwhile, her public reunification events supplied media exposure while the amounts returned barely register against amounts held in the unclaimed property system.

5. Herb Morgan Will Fix It

Put Owners First. Make Recovery the Mission

As Controller, I will make returning property to its rightful owners the measure of success. Californians should not need political access, a television report, or extraordinary persistence to recover what belongs to them. I have already publicly opposed AB 1447.[29] I will continue to oppose it for the reasons outlined in this paper and work for rules that protect long-term savers, put owners first, and make recovery easier.

The Legislative Analyst’s Office identified the central conflict in its February 2015 report: returning property serves owners, while retaining it supplies General Fund revenue. The report called for a stronger focus on reunification and measurable results.[3] I will review and update that blueprint, identify what has been implemented, and publish a reform schedule. Changes within the Controller’s authority will move forward within my first 100 days; changes requiring legislation or funding will become public proposals.

Measure Money Returned, Not Money Retained

I will set clear annual targets for the number and value of properties returned, the time it takes to pay claims, and backlog reduction. A public scorecard will show targets, actual results, and missed deadlines. Publicity events will not substitute for program-wide performance. Additional spending should produce measurable gains for owners. I will evaluate a return target, such as $3 reunited with owners for each additional $1 spent, against a verified baseline. We will publish the costs, methods, and results so Californians can judge whether the investment works.

Find Owners and Return Their Money Proactively

I will expand secure matching of unclaimed property records with tax and other authorized agency data, including property-tax records and Postal Service address updates to improve contact information.[36] Where identity and entitlement can be reliably verified and the law permits, the goal will be automatic payment without making an owner file a separate claim. The LAO’s 2015 report highlighted Wisconsin’s tax-data matching approach as a model worth considering.[3]

When an owner’s response is needed, I will use targeted outreach through mail, social media ads, phone calls, and text messages. Every message should explain how to independently verify that it is legitimate and complete the next step. I will also evaluate whether a clearer program name and presentation would help people recognize that the state may be holding their money.

Make Claims Easier for Owners and Heirs

I will remove unnecessary paperwork, expand online document submission, and make electronic processing easier to use. Automated checks should expedite straightforward claims and flag suspected fraud, with staff available to resolve complicated estates and ownership questions.

Controller Betty Yee raised the paperless eClaim limit from $1,000 to $5,000 in November 2015.[28] I propose a $10,000 limit for qualifying claims, paired with improved identity and ownership checks.

We estimate that raising the eClaim limit from $5,000 to $10,000 could return many additional single-owner cash accounts.

Potential reach: about 98,000 additional accounts, worth about $678 million.

Fix Records That Keep Owners From Finding Their Property

Misspelled names, swapped fields and unusable addresses can stand between a family and its property. I will apply Radical Transparency methods to find errors, correct verified mistakes and return unresolved problems to reporting institutions for review. Corrections will be traceable, and uncertain matches will receive human review.

Preliminary Findings From Our Analysis
  • About 5.26 million properties, worth roughly $1.82 billion, have basic ZIP-code or related address defects. Each property is counted once in this total, even if it has multiple defects.
  • These include about 1.81 million records without ZIP codes and 3.49 million with all-zero ZIP codes, plus incomplete codes, state mismatches, and foreign addresses classified as domestic.
  • About 2.24 million affected properties, worth roughly $1.77 billion, are at or above the $50 mailed-notice threshold.
  • The 2015 LAO report identified at least 18 spelling variations of “San Bernardino.”[3] As of September 2026, roughly 24,000 records contain misspellings of San Bernardino, spanning more than 500 distinct variations.

These are preliminary data-quality findings, not proof that every affected owner missed a notice. I will publish the definitions and validation methods alongside the results.

I will make error detection part of routine reporting and measure whether corrections help owners find and recover their property. The goal is simple: fewer obstacles, faster returns, and an office accountable to the people whose property it holds.

I Will Make the Unclaimed Property System Work for You Again

Nearly twelve years have passed since the Legislative Analyst’s Office published its February 2015 reform blueprint. That report documented 28.4 million unclaimed properties worth $7.2 billion at the end of fiscal year 2013–14.[3] In February 2026, HR 79 reported more than 93.6 million properties worth more than $15.485 billion. The reported number of properties has more than tripled, and their value has more than doubled.[10] The 2015 report described a program generating over $400 million in annual General Fund revenue.[3] California’s enacted budget projects approximately $1.96 billion in abandoned-property revenue for 2026–27.[2]

During those same years, there have been huge advancements in information technology and artificial intelligence that make program improvement recommendations more achievable than ever before. The LAO’s recommendations provide a starting point. Modern tools and a radical transparency mindset give us new ways to carry them out.

The new bill Malia Cohen endorsed and the 2015 LAO recommendations she didn’t implement have made the unclaimed property system more of a parasite than ever before. As your next State Controller, I will turn the office’s authority, technology, and incentives toward protecting owners and returning their property.

It is your property. Returning it will be my job. I’ve already started…

References
[1]
CDC · about parasites
Working biological definition used to introduce the economic analogy.
Cited in
3. Protector to Parasite
[2]
Schedule 8 · Enacted 2026–27 budget
Enacted 2026–27 budget, Schedule 8, page 6: abandoned-property revenue estimate of $1.958262 billion (approximately $1.96 billion).
Cited in
3. Protector to Parasite5. Herb Morgan Will Fix It
[3]
Legislative Analyst’s Office, 2015
2015 review: custodial program goals, checking-account dormancy history, 2003 interest change, and historical collections versus returns.
Cited in
2. State Management3. Protector to Parasite5. Herb Morgan Will Fix It
[4]
CCP §1563 · sale and recovery
Securities sale window, net proceeds available to claimants, and digital-asset conversion rules.
Cited in
2. State Management3. Protector to Parasite
[5]
CCP §1564 · General Fund transfers
Abandoned Property Account and monthly transfers of excess funds to the General Fund.
Cited in
3. Protector to Parasite
[6]
CCP §1540 · claims and interest
Owner claims, claim timing, and the statutory rule providing no interest on paid claims.
Cited in
2. State Management3. Protector to Parasite
[7]
SB 822 · chaptered text
Chaptered SB 822: digital financial assets and related notice, transfer, and conversion provisions.
Cited in
3. Protector to Parasite
[8]
State Controller · Unclaimed Property Law and Regulations, February 2026
Code of Civil Procedure §1571 (page 39) addresses examinations and third-party auditors hired by the Controller. California Code of Regulations §1180.014 (page 60) permits compensation based on time and materials, a percentage of the amount recovered, or a combination.
Cited in
3. Protector to Parasite
[9]
Controller’s December 2022 report
End-of-Yee-administration snapshot: $11.2 billion and 64 million properties held.
Cited in
4. Malia Cohen Is Making It Worse
[10]
HR 79 · February 2026
Reported holdings of over $15.485 billion and 93.6 million properties; prior-year returns; operative resolution.
Cited in
3. Protector to Parasite4. Malia Cohen Is Making It Worse5. Herb Morgan Will Fix It
[11]
HR 20 · 2025
Unclaimed Property Month resolution and its outreach provisions.
Cited in
4. Malia Cohen Is Making It Worse
[12]
Controller · June 4, 2026 outreach announcement
First-round letters and reported returns; second-round mailing; claim-code process.
Cited in
4. Malia Cohen Is Making It Worse
[13]
AB 1447 · August 10, 2026 text
Proposed securities inactivity, owner-location, notice-response and automatic-dividend rules.
Cited in
4. Malia Cohen Is Making It Worse
[14]
Senate Judiciary · AB 1447 analysis, July 1, 2025
Identifies Malia Cohen as sponsor and describes the earlier address-notification version.
Cited in
4. Malia Cohen Is Making It Worse
[15]
Coalition opposition letter · August 21, 2026
Industry and other organizations’ objections and predicted investor harms. Predictions are attributed to the signatories.
Cited in
4. Malia Cohen Is Making It Worse
[16]
Senator Warren · April 15, 2026 NAUPA letter
Requests state data, return rates, auditor compensation and information about dormancy policy.
Cited in
4. Malia Cohen Is Making It Worse
[17]
SAFER Act · official bill text (PDF)
H.R. 8338, introduced April 16, 2026.
Cited in
4. Malia Cohen Is Making It Worse
[18]
Controller · county returns, April 29, 2025
Announced $2.3 million returned to all 58 counties.
Cited in
4. Malia Cohen Is Making It Worse
[19]
Controller · JACL check presentation, August 6, 2024
Announced $24,087 for the Japanese American Citizens League, San Francisco Chapter.
Cited in
4. Malia Cohen Is Making It Worse
[21]
Controller · Orange County event, October 29, 2025
Official English-language release: $241,983.11 for Orange County and 12 cities.
Cited in
4. Malia Cohen Is Making It Worse
[22]
KCRA · June 11, 2024
June 11 video report. KCRA’s June 12 written recap also covers Santiago’s recovery.
Cited in
4. Malia Cohen Is Making It Worse
[23]
CBS investigation
Nonprofit balances. Published March 11, 2026.
Cited in
4. Malia Cohen Is Making It Worse
[24]
Controller · how to claim property
Public claims-volume notice reviewed September 18, 2026.
Cited in
4. Malia Cohen Is Making It Worse
[25]
Controller · claim review timelines
Up to 180 days from receipt of a complete claim package; cash-only claims may be processed sooner.
Cited in
4. Malia Cohen Is Making It Worse
[26]
Controller · payment FAQ
Additional securities research may take 120 days to one year.
Cited in
4. Malia Cohen Is Making It Worse
[27]
CBS · Doug Brown
Published June 15, 2026.
Cited in
4. Malia Cohen Is Making It Worse
[28]
Controller Yee · eClaim expansion, November 5, 2015
Raised the paperless claim threshold from $1,000 to $5,000.
Cited in
5. Herb Morgan Will Fix It
[29]
Los Angeles Times via AOL · August 24, 2026
Reports Morgan’s opposition to AB 1447.
Cited in
5. Herb Morgan Will Fix It
[30]
California government · unclaimed property overview
Definition, common property types, and owner-contact requirements.
Cited in
1. Unclaimed Property
[31]
CCP §1531 · owner notification
Subdivision (b): individualized mailed notice for property valued $50 or more; subdivision (a): general public notice.
Cited in
3. Protector to Parasite
[32]
CCP §1300(d) · permanent escheat
2025 code text reproduced by Justia; definition of permanent escheat.
Cited in
2. State Management
[33]
State Controller · About Unclaimed Property
Official overview listing stocks, mutual funds, bonds, and dividends among common types of unclaimed property.
Cited in
1. What Is Unclaimed Property?
[34]
Douglas Aircraft Co. v. Cranston · California Supreme Court, 1962
58 Cal.2d 462, 463: identifies protecting owners and giving the state the benefit of unclaimed property use as objectives of the act.
Cited in
2. State Management
[35]
Legislative Analyst’s Office · March 15, 2019
Increasing Compliance With Unclaimed Property Law: explains General Fund revenue remaining after owner returns and program administration.
Cited in
3. Protector to Parasite
[36]
CCP §1531.5 · owner-location authority
Notification program and access to government address, identification, and location information, subject to federal-law and permitted-use restrictions.
Cited in
5. Herb Morgan Will Fix It
[37]
Los Angeles Times · Contractors find property for state, for a cut · July 9, 2007
Marc Lifsher. Reports California contractor commissions of 6.8%–10.7% in 2007 and critics’ “bounty hunters” characterization. Subscription may be required.
Cited in
3. Protector to Parasite
[38]
Peters v. Cohen · 2025 petition for certiorari
Printed pages 11–12: the petition describes an 11% commission paid to private auditors working for the State. Publicly accessible filing hosted by the U.S. Supreme Court.
Cited in
3. Protector to Parasite