California AB 1447: When Could the State Take Your Forgotten Stocks?

California lawmakers are considering a bill that could change how quickly the state takes custody of inactive stocks, mutual funds and other securities. The proposal, Assembly Bill 1447, does not create a new deadline for everyday investors, but it seeks to clarify the standard used to decide whether an account has been abandoned.

The measure has become controversial because business groups argue it could make it easier for California to take, and later sell, investments belonging to people who simply stopped checking an account.

Worth reading: The State By State Guide to Unclaimed Assets
 

What AB 1447 would change

Under California’s current unclaimed-property rules, securities can be treated as abandoned after three years when the owner has not interacted with the account or otherwise shown interest in the property. Account activity can include logging in, contacting the financial institution or responding to communications about the account.

AB 1447 would add language stating that securities may be transferred to the state when an owner does not respond to a notice sent by the financial institution by mail or electronically. Supporters, including State Controller Malia Cohen’s office, say the bill clarifies existing law and creates a consistent standard for determining whether an owner remains connected to an account.

Critics argue that the proposal would weaken a protection they say exists under current law: that the holder should not turn over securities if it still knows how to reach the owner.
 

When could your stock be considered abandoned?

The key timeframe is generally three years of no owner activity, but it is not as simple as forgetting a password or skipping a quarterly statement.

The proposal’s practical effect depends on whether lawmakers adopt a standard that requires returned mail or instead treats prolonged inactivity and a lack of response to notices as enough to trigger the unclaimed-property process. As of late August, AB 1447 remained in progress in the California Senate.
 

What happens after the state takes custody?

California holds billions of dollars in unclaimed property, including inactive bank accounts, uncashed checks, securities and retirement-related assets. Reporting has put the statewide total at roughly $15 billion.

For securities, the distinction is important: California can eventually sell the shares. Under the state’s process, securities are held before liquidation, then the proceeds are transferred to the state. A former owner may still submit a claim later, but if the stock has been sold, the owner generally receives the proceeds from the sale—not the original shares or any later increase in value.

Why the bill faces opposition

The Investment Company Institute, California Chamber of Commerce and other groups oppose AB 1447. They say the bill could permit securities to be taken after three years of inactivity even when statements or tax forms are still reaching the investor.

Supporters counter that unreturned mail does not necessarily prove an owner is actively connected to an account. Cohen’s office has also expressed concern that leaving dormant accounts with a securities holder could allow fees to reduce their value.

The disagreement mirrors a broader policy question: should the state wait for evidence that mail cannot reach an investor, or should years of silence and a failure to answer notices be enough?
 

How to protect your investments

You do not need to trade constantly to keep an account from being treated as abandoned. But it is wise to show occasional activity and make sure the financial institution can reach you.

• Log in to every brokerage, mutual-fund and retirement account periodically.

• Keep your mailing address, email address and phone number updated.

• Open and respond to account notices, tax documents and requests to confirm your information.

• Consolidate forgotten accounts where appropriate, particularly after changing jobs or moving.

• Search California’s official unclaimed-property database for your name and for relatives whose assets you may be entitled to claim.

• Do not ignore a letter or email saying an account may be transferred to the state.

California’s unclaimed-property claims process is free. Check the California State Controller’s Office for official instructions and avoid paying an outside company simply to search for assets.

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