Planet Money: Escheat Show (Update) – Detailed Summary
Release Date: March 19, 2025
Introduction
In the March 19, 2025, episode of NPR's Planet Money, host Kenny Malone revisits a compelling story originally aired a few years prior. This update delves deeper into the intricate world of escheat—the process by which state governments reclaim unclaimed property—and its profound implications on individuals and public finances. The episode not only reexamines the plight of Walter Schramm, an erstwhile guest who lost a substantial investment to escheat but also explores the systemic issues and evolving practices surrounding unclaimed property in the United States.
The Story of Walter Schramm
Walter Schramm's Investment Journey
The episode begins with the story of Walter Schramm, an Italian entrepreneur who, in the late 1990s, founded a company selling Italian specialty products online. As his business flourished, another online giant, Amazon, emerged. Walter, embodying the investment philosophy of Warren Buffett, decided to invest a few thousand dollars in Amazon shares through E*TRADE, adopting a passive approach by simply letting the investment grow over two decades without frequent monitoring.
Quote:
Walter Schramm (02:06): "If you believe in a company, you need to buy the stock and let it sit for 20 years. I mean, that's the philosophy of Warren Buffett. Go out and have a walk, enjoy nature, talk to your family. Don't worry about the stock market."
The Escheat Mishap
In 2015, after approximately 20 years, Walter revisited his ETRADE account, only to find it empty. ETRADE directed him to the Delaware Unclaimed Property Office, where he discovered that his Amazon shares had been escheated. The term "escheat"—a legal mechanism by which unclaimed property is transferred to the state—was unfamiliar to Walter until then.
Quote:
Walter Schramm (03:02): "I saw nothing. The account was empty." (03:02)
Understanding Escheat and Unclaimed Property
Definition and Historical Context
Escheat is rooted in feudal England and refers to the state's right to take control of property when an individual dies without heirs or abandons their assets. In modern America, each state has an Unclaimed Property Office responsible for managing forgotten or abandoned assets such as retirement accounts, insurance policies, and uncashed checks.
State's "Lost and Found"
Audrey Quinn and Kenny Malone liken escheat to a gigantic, state-run lost and found system. This ensures that abandoned property is safeguarded until rightful owners claim it.
Quote:
Audrey Quinn (07:08): "Think of it as like a giant state run lost and found." (07:08)
Unclaimed Property Statistics
States collectively receive approximately $8 billion annually in unclaimed property, with about two-thirds of this amount remaining unclaimed and subsequently funneled into state budgets.
Quote:
Kenny Malone (10:26): "States are taking in about $8 billion a year of unclaimed property, and about two thirds of that money stays unclaimed." (10:26)
State Revenue from Escheat
Significant Revenue Source
Unclaimed property has become a substantial revenue stream for states. For instance, California ranks escheat as the fifth-largest revenue source, while Delaware stands third. These funds support various public programs but also raise concerns about the ethical implications of states benefiting from citizens' forgotten assets.
Perverse Incentives
The revenue generated from escheat can create conflicts of interest. States might prioritize the accumulation of unclaimed funds over efficiently returning assets to their rightful owners, as more unclaimed property translates to increased state revenue without the need to raise taxes.
Quote:
Brenda Mayrach (11:14): "Do we do a good job getting money back to people, or do we just let it sit here and we don't have to raise taxes." (11:14)
The Flaws in the System
Evolving Escheat Practices
Over the years, states have become more aggressive in seizing unclaimed property. Criteria for deeming property abandoned have loosened, and the time frames for inactivity that trigger escheat have shortened. For example, while previously a bank account might be considered abandoned after a piece of return mail, many states now escheat assets simply due to infrequent account access within a set period.
Quote:
Audrey Quinn (12:32): "Property gets labeled abandoned just because a person didn't check into their account or access the account within a certain length of time." (12:32)
Impact on Investments
Walter Schramm’s case highlights a significant flaw in how escheat handles investments. Unlike straightforward assets like bank accounts or checks, investments involve complex valuations over time. The state of Delaware liquidated Walter’s Amazon shares in 2008, long before Amazon became a tech behemoth, offering him a minimal payout based on the stock’s value at the time of escheat rather than its current worth.
Quote:
Walter Schramm (14:40): "So, that's the first time they really took control of my investment... escrowed the value." (Hypothetical timestamp based on context)
Legal Actions and Updates
Class Action Lawsuit
Five years after the original episode, Walter Schramm successfully found legal representation and became the lead plaintiff in a class action lawsuit against Delaware’s unclaimed property office. The lawsuit contends that the state failed to provide adequate notice before seizing and liquidating his Amazon shares, thereby violating his rights as a property owner.
Increased Escheat Revenue
Since the initial story, unclaimed property findings have surged. Planet Money listeners collectively uncovered over $38,000 in unclaimed assets, highlighting both the prevalence of forgotten property and the effectiveness of state escheat systems in safeguarding these assets.
Quote:
Kenny Malone (22:00): "Since our episode originally ran, Planet Money listeners like you have found over $38,000 in unclaimed property at their various states." (22:00)
State Reforms
Delaware has implemented changes aimed at improving the escheat process. These include mandatory notifications to property owners before escheat occurs. However, the thresholds for deeming property abandoned—such as three years for investments and five years for bank accounts—remain points of contention for being arbitrary and potentially exploitative.
Quote:
Brenda Mayrach (19:38): "The state complies with its laws. If a person isn't exercising ownership over their account, they may have passed away. That's why states have unclaimed property laws." (19:38)
Walter's Continued Struggle
Despite the legal action, Walter remains bound by the original settlement offer from Delaware, which compensates him with the 2008 value of his Amazon stock (~$8,000) instead of its current worth. Anticipating future appreciation, Walter plans to pursue legal remedies once the value of his inherited shares justifies the investment in legal proceedings.
Quote:
Walter Schramm (21:21): "I didn't cash that check. I wrote them that I don't accept their offer. I am sure the way Amazon is growing, their stock will be 20, 30 times the value of today in 20 years." (21:21)
Listener Interaction and Final Thoughts
Encouraging Self-Audits
Planet Money emphasizes the importance of individuals actively checking for unclaimed property. Hosts encourage listeners to search their state’s unclaimed property databases annually to reclaim forgotten assets, reinforcing the message through personal anecdotes and listener success stories.
Quote:
Audrey Quinn (09:09): "The point is that you listening at home, you should look yourself up. You may have left behind a paycheck, utility credits, bank account you thought you closed." (09:09)
Support for Journalism and Future Content
In concluding the episode, the hosts highlight the ongoing efforts to document and report on unclaimed property cases. They invite listeners to contribute stories and express gratitude for the financial support that sustains independent journalism at Planet Money. Additionally, they tease exclusive content available to Planet Money+ subscribers, illustrating the show's commitment to deepening economic understanding.
Quote:
Kenny Malone (17:30): "So for now, Walter is stuck with the original deal from Delaware. The state offered to pay him back the value of his stock from when they cashed in 2008, which is about $8,000." (17:30)
Conclusion
The updated Planet Money episode on escheat illuminates the complex interplay between state revenue mechanisms and individual property rights. Through the poignant story of Walter Schramm and expert insights from unclaimed property professionals, the episode underscores the necessity for transparency, reform, and proactive personal financial management. As states continue to evolve their escheat practices, listeners are encouraged to stay informed and vigilant to prevent unwitting forfeiture of their hard-earned assets.
Produced originally by Alexi Horowitz Ghazi with editing from Nick Fountain. The update was produced by James Sneed. Executive producer: Alex Goldmark.