5 ways to stop unclaimed property escheatment before it happens

For many organizations, unclaimed property compliance is shaped almost entirely by state‑mandated timelines and due diligence requirements. Most states require due diligence letters to be sent no sooner than 60 to 90 days prior to the reporting deadline, leaving a narrow window for businesses to locate and engage account holders. 

Although these statutory requirements are important, they often create a reactive mindset. Accounts are addressed only once dormancy thresholds are met, outreach is limited to required mailings, and meaningful engagement begins when time and options are already constrained. In practice, this means many organizations are performing dormancy analysis and account reviews far too late in the process. 

That delay carries real risk: Waiting until the due diligence window frequently leads to the discovery of past due property, often leaving businesses without sufficient time to remediate. The result can be increased exposure to penalties, interest, enforcement inquiries, and unclaimed property audits. 

Not surprisingly, this approach also produces poor outcomes. Across industries, standard due diligence response rates typically average just 10% to 15%—not because organizations are failing to comply, but because engagement is occurring far too late in the account life cycle. When coupled with census‑based estimates that the average person moves approximately 11 to 12 times during their lifetime, it becomes clear why address data is often outdated by the time statutory outreach begins. 

It is also worth noting that credible estimates place the total amount of unclaimed property held by U.S. states between $100 billion and $150 billion, a figure that continues to grow each year. Within those totals are real people, customers, and business parters with individual stories, reinforcing the need for businesses to consider what more can be done to reduce escheatment volumes while preserving valuable relationships. 

Leading unclaimed property programs are moving beyond a “minimum required” mindset and focusing instead on early‑stage prevention, where escheatment risk can actually be reduced. Here are five ideas for stopping escheatment before it happens.

1. Treat unclaimed property as a long‑term risk, not a statutory burden 

There are well over 100 property codes and classifications related to unclaimed property, many of which carry dormancy periods of three to five years or longer. Over that time, life happens. Owners relocate, change jobs, merge households, dissolve relationships, or pass away, often without realizing that inactivity or failed contact can trigger state dormancy rules. 

Mail forwarding may help temporarily, but it rarely lasts long enough to support outreach several years later. By the time state‑mandated due diligence notices are sent, owner contact information is frequently outdated, resulting in high volumes of failed contact attempts and returned mail, a primary upstream driver of escheatment and the loss of long‑standing owner relationships. 

Organizations that reduce escheatment most effectively: 

• Monitor aging property well before dormancy thresholds 
• Identify owner populations trending toward inactivity 
• Build visibility into escheatment risk earlier in the property life cycle 
• Embed regular contact information verification (for example, every 12 to 18 months) into policies and procedures 

Unclaimed property is not a moment triggered by statute; it is a gradual process that requires ongoing attention across all property types. 

2. Move beyond the “check‑the‑box” due diligence mindset 

State statutes define when a due diligence letter must be sent, not how effective outreach needs to be. Response rates commonly hover around 10%-15%, which means relying solely on required letters places excessive pressure on a single, late‑stage communication attempt. When that outreach fails, escheatment becomes unavoidable rather than preventable. 

More mature programs recognize that: 

• Required due diligence is a backstop, not a strategy 
• Mail‑only outreach is insufficient for modern customers 
• Compliance success should be measured by outcomes, not just statutory timing 

Effective compliance means meeting statutory obligations while acknowledging their limitations. 

3. Increase proactive engagement well before due diligence is required

One of the most effective ways to stop escheatment is also one of the least disruptive: Communicate sooner and more consistently. Organizations that are most effective at preventing escheatment make it standard practice to collect and maintain complete contact information from the start. That includes not only a customer’s name and mailing address but a validated email address and mobile phone number. Making these data elements mandatory at account opening establishes a stronger foundation for long‑term engagement. 

When full contact profiles are captured upfront, organizations gain significantly more flexibility in how—and when—outreach can occur over the life of the relationship. Email and text‑based communications enable routine, low‑cost engagement that is faster, more reliable, and often more effective than traditional mail alone. These channels also support periodic verification and ongoing connectivity without having to wait for statutory deadlines or dormancy triggers. 

Across financial services, organizations are taking proactive steps by: 

• Increasing routine, noncompliance‑driven communications 
• Prompting regular address and contact verification 
• Encouraging low‑effort account activity 
• Coordinating outreach across lines of business 

These touchpoints do not need to reference unclaimed property. Their purpose is to maintain connection, confirm reachability, and reinforce engagement before statutory dormancy clocks expire.

From a customer perspective, this looks like service—not regulation. 

4. Improve address quality and contact intelligence early 

Improving contact data earlier not only increases engagement success, but it also reduces downstream operational strain caused by amendments, reporting exceptions, customer complaints, and audit exposure. 

To improve address quality, many organizations are investing earlier in: 

• Address hygiene and validation 
• Cross‑system data consistency checks 
• Identification of more current or alternative contact information 
• Updating records whenever customers interact with the organization in any capacity 

5. Understand the stakes associated with escheatment 

Escheatment is not simply a reporting event: It can introduce compliance, legal, and reputational risk. 

When customer accounts are escheated: 

• Complaints may arise when customers discover funds were transferred without their awareness 
• Regulatory scrutiny can increase if outreach practices are questioned 
• Lawsuits can emerge alleging insufficient notice or premature escheatment where there could be a significant loss in market value for certain assets 
• Public trust can erode, even when statutory requirements were technically met 

All companies, regardless of industry, should focus on reducing unclaimed property liabilities. However, certain industries face a heightened level of risk due to the nature of their operations. For many financial services firms, this risk is amplified by a focus on retaining assets under management. When assets are escheated, organizations do not simply transfer balances—they lose control of customer relationships, future revenue opportunities, and long‑term trust. 

Once assets enter state custody, recovery becomes more difficult, engagement becomes reactive, and reputational damage can linger well beyond the compliance cycle. 

Preventing escheatment requires a proactive approach 

Preventing escheatment requires getting out of the mindset of doing only what state statutes require and shifting toward earlier, more proactive engagement. 

Organizations that take this approach are better positioned to: 

• Reduce escheatment 
• Limit audit exposure 
• Preserve assets under management 
• Strengthen long‑term customer and member relationships 

The strongest unclaimed property programs today focus on identifying risk earlier, enhancing policies and procedures to address dormancy sooner, and leveraging technology to locate updated contact information and reconnect with customers before property becomes reportable. 

Kodiak’s search and location team helps organizations operationalize this approach by building customized prevention strategies that identify at‑risk accounts earlier, strengthen existing processes, and use technology effectively to find updated contact information and reengage customers before escheatment occurs. 

Meeting minimum compliance requirements isn’t enough. True prevention protects customers, preserves assets, and strengthens long-term trust.