A due diligence letter is a formal notice from a bank, insurer, employer, or other company telling you that money or property held in your name has been inactive long enough that it is about to be turned over to the state as unclaimed property. You keep the money by confirming the letter is genuine and responding to the holder before the deadline printed on it. Ignore it, and your assets get transferred to the state treasury, where getting them back takes considerably more paperwork and time.
Why You Received One
Every state sets a dormancy period — a stretch of time with no owner-initiated activity on an account — after which the holder must treat the property as abandoned. For most property types the standard period is three years. Some categories run shorter: uncashed payroll checks and other wage payments can trigger dormancy in as little as one year, and certain insurance proceeds and utility deposits have their own timelines.
The kinds of accounts that typically generate these letters include forgotten savings or checking accounts, uncashed dividend or insurance checks, unredeemed gift cards above a certain value, old apartment security deposits, and inactive brokerage accounts. Under the Revised Uniform Unclaimed Property Act, the model law most states follow in some form, the holder only has to send a notice when it has what it believes is a valid mailing address for you and the property is worth at least $50.1Maine State Legislature. Revised Uniform Unclaimed Property Act – Section 501 If you previously agreed to receive communications by email, the holder must also send the notice to that email address in addition to first-class mail.
What the Letter Must Include
The model act requires the notice to identify the type of property and its value, state that it will be transferred to the state’s unclaimed property administrator if you don’t act, and explain that after that transfer you would have to file a claim with the state to get it back. It must give you clear instructions for preventing the transfer and include the holder’s name, address, and a phone number or email to reach them.2Maine State Legislature. Revised Uniform Unclaimed Property Act – Section 502
The heading usually reads something like: “The State of [your state] requires us to notify you that your property may be transferred to the custody of [the state unclaimed property office] if you do not contact us before [date].” That date is often 30 days after the letter was mailed. The notice itself goes out no fewer than 60 and no more than 180 days before the holder files its abandonment report with the state, so you generally have at least two months of real runway even if the printed deadline looks tighter.1Maine State Legislature. Revised Uniform Unclaimed Property Act – Section 501
How to Tell If the Letter Is Legitimate
Scammers routinely impersonate state agencies and financial institutions with fake unclaimed property notices, so verify before you respond. A real due diligence letter comes from a company you have an actual history with, references a specific account or payment, and never asks you to pay a fee to release your money.
The quickest way to verify is to look up the company’s phone number independently — not from the letter itself — and call to confirm they sent it. You can also search for your name on your state’s official unclaimed property website or on MissingMoney.com, a free multi-state search tool run by the National Association of Unclaimed Property Administrators.3National Association of Unclaimed Property Administrators. NAUPA Legitimate state programs never charge you to search or file a claim.
Warning signs of fraud:
- Any demand for a processing fee, tax payment, or release charge before you can access the funds.
- Urgency language such as “final notice,” “immediate verification required,” or “funds will be forfeited today.”
- Requests for your Social Security number, bank account details, or ID photos before you’ve verified the sender through independent channels.
- Contact by text message or social media. Real due diligence letters come by first-class mail.
How to Respond
Once you’ve confirmed the letter is real, respond before the deadline on it. The response usually means completing a form that came with the letter (or is available on the holder’s website) and sending in documentation that proves you are the rightful owner.
Documents You’ll Need
Most holders ask for a legible copy of a government-issued photo ID such as a driver’s license or passport. You’ll confirm your Social Security number or ITIN, and provide a current mailing address. If you’ve moved since the account was active, the holder may ask for a utility bill or bank statement at your new address.
Some states and holders require a notarized signature when the property exceeds a certain threshold. Common cutoffs are $1,000 and $5,000, depending on the state and property type. Securities claims often require notarization regardless of value. If the letter doesn’t say, call the holder’s compliance or escheatment department and ask before you submit.
Filling Out the Form
The response form usually gives you choices. You can request a check or direct deposit, ask that the account be reactivated so you can use it normally, or simply confirm ownership to stop the abandonment classification while leaving the money where it is. Pick whichever matches what you want. Complete every required field, sign where indicated, and keep a copy of everything you send.
Sending It In
Many holders now have a secure online portal where you upload scanned documents and get an instant confirmation number. If you mail physical paperwork, send it certified with return receipt. That receipt is your proof the holder received your response before the deadline. The industry standard is to allow 30 to 60 days for an owner response, so don’t wait until the last week to gather paperwork. If you haven’t heard anything within 60 days of a complete submission, follow up with the holder directly.
If the Letter Is Addressed to Someone Who Has Died
Heirs and estate representatives can respond, but the paperwork is heavier. At minimum you’ll need a certified copy of the death certificate and proof that you’re legally entitled to the property.
If the estate went through probate, the court-appointed executor or administrator files the response along with their letters testamentary or letters of administration. If no estate was opened, most holders and states let the closest living relative claim the property with an affidavit of heirship (sometimes called a small estates affidavit), the death certificate, and the claimant’s own ID. Eligibility usually follows intestacy priority: surviving spouse, then children, then parents, then siblings.
The deadline on the letter applies whether you’re the original owner or an heir. If you need more time to pull probate documents together, contact the holder’s escheatment department and explain the situation. Many will extend the response window when a death is involved, though they aren’t always required to.
What Happens If You Don’t Respond
When the deadline passes with no response, the holder enters the final step: escheatment. It files a report with the state listing your last known information and the property, and transfers the assets to the state’s unclaimed property division.4U.S. Securities and Exchange Commission. Escheatment by Financial Institutions From that point on, the bank, insurer, or employer no longer holds your property, and you cannot recover it from them.
The state then becomes the custodian. In most states, you or your heirs can claim the property in perpetuity — there’s no deadline for recovering it from the state.4U.S. Securities and Exchange Commission. Escheatment by Financial Institutions But the state may sell non-cash property like securities, so what you eventually get back could be sale proceeds rather than the original shares. Responding to the letter is always easier than reclaiming from the state afterward.
Recovering Property After It’s Been Transferred to the State
If your property has already been escheated, you file a claim directly with your state’s unclaimed property office. Every state maintains a searchable online database. Start at your state treasurer’s or comptroller’s website, or use the free national search at MissingMoney.com.3National Association of Unclaimed Property Administrators. NAUPA
The documentation looks similar to what the holder would have required: government-issued ID, proof of your Social Security number, and sometimes evidence connecting you to the original account, such as an old statement or the original due diligence letter. For larger claims, states commonly require notarized signatures. Processing times vary; simple claims can pay in a few weeks, complex or high-value ones in several months.
Filing a state claim is free. Be skeptical of anyone who contacts you offering to recover unclaimed property for a fee. Third-party locator services are legal in most states, but many states cap their fees, often at 10 to 20 percent of the recovered amount. You can almost always file the same claim yourself at no cost.
Taxes on Recovered Property
The principal — the original balance in your bank account, the face value of an uncashed check, the payout from an insurance policy — is generally not new taxable income. You already owed tax on it (or didn’t) when it was first earned or paid, and recovering it years later doesn’t create a new tax event for that principal.
Interest is different. If the state paid interest while holding your funds, that interest is taxable income in the year you receive it. States that pay interest typically issue IRS Form 1099-INT when the interest portion reaches $600 or more. Below that threshold, the interest is still technically reportable on your federal return. And if you recover a property type that would have been taxable when originally received, such as unpaid wages or unredeemed stock dividends, you may need to report that income too. A tax professional can sort out what applies.
How to Keep This from Happening Again
The simplest way to keep accounts from being flagged as abandoned is to make owner-initiated contact at least once during the dormancy period. Log in to online banking, cash dividend checks promptly, respond to annual statements, or make a small deposit or withdrawal. Any owner-initiated activity resets the dormancy clock. Keep your mailing address and email current with every financial institution where you hold accounts; returned mail is one of the first signals that triggers the abandonment process.5U.S. Securities and Exchange Commission. Investor Bulletin – The Escheatment Process
When you move, update your address with banks, brokerages, former employers who may owe you a final paycheck or retirement distribution, and insurance companies where you hold policies. Smaller balances at institutions you rarely think about are the ones that quietly slip into dormancy. A periodic search on MissingMoney.com can catch anything that has already been escheated before you realized it was missing.