Must-Have Information if You've Ever Incorporated in Delaware
The state of Delaware is known for having lots of corporations. It's one of the few states that does not tax corporate income at all, though it does tax personal income. Many larger companies choose to incorporate here. Some smaller companies from out of state do so as well, but benefits for smaller companies can be limited. Delaware understands that this naturally means there will be a huge number of unclaimed assets.
As a mecca for the fiscally savvy, the state has some ideas of its own that allow it to keep your money in certain cases. Here's what you need to know about Delaware's unclaimed asset laws and how to make sure you get what you're owed.
The New Law
Delaware recently changed its stance on unclaimed assets. At one point, the state only needed to publish a paperback containing a list of names and what was owed. They did not even have an online database, making it very easy to lose track of funds. This comprised about an eighth of the state's budget. After being called out on news platforms and being sued by many other states and entities, Delaware finally passed a reform law.
This makes it mandatory for the state to attempt to get in touch with an asset holder at least twice in one year via phone and email. They'll also need to periodically put ads in newspapers to remind readers of the fact that they may be owed property. The law addresses some of the previous lack of transparency and makes the state publish more granular data on who is owed money.
If You Were Owed Money Before
While Delaware is certainly taking a step in the right direction, this new law does nothing to help those whose assets were lost years ago. Because it averaged approximately $500 million in unclaimed assets in its state budget every year for awhile, the state simply doesn't have the money to pay back to its rightful holders.
The Supreme Court of the United States has made it very clear that the state indeed has a right to keep unclaimed assets after making a substantial attempt at publishing the information and allowing rightful owners to claim them. If you had extenuating circumstances, you may still be able to sue for your assets back.
Will Protections Be Expanded?
Though Delaware helped unclaimed asset owners immensely by passing this law following a trend of lawsuits against the state for not doing so, it's less clear whether protections will be expanded. For example, most states simply hold onto unclaimed assets until the owner and beneficiaries are all proven deceased. This is usually seen as the most fair approach.
It's unlikely that Delaware would ever adopt a measure this extreme, though. The state has a fairly low tax burden as it is, and it can largely do this because of its unique incorporation system that most states lack. However, the state is moving towards complete digitization from its archaic "paper only" publication. Private companies used to scan these in and then charge people to search their databases, but the state is working on a free database for anyone to search.
How Do I Search for Corporate Money
Delaware classifies corporations as completely separate entities from people, even if the corporation is owned and managed by one person. Searching for your name may or may not yield the assets to which you're entitled. If they're personal assets, you'll see them. However, you'll need to search by corporation name to retrieve corporate assets. Corporate assets make up the vast majority of what goes unclaimed in Delaware, making it important to claim your money as soon as possible.
Trials and Tribulations of Unclaimed Assets in Delaware
Delaware has a nearly perfect backdrop for most corporations. Many save millions of dollars a year because they don't need to pay income taxes. The state provides strong identity protection to people within corporations and profits indirectly off of them being headquartered there through things like payroll taxes.
As the adage goes, "whatever goes up must come down", and Delaware's tax advantages are the same. They look great when you're looking for somewhere to incorporate; however, it's one of the most common places for corporations to lose assets that the state promptly allocates to itself with very little warning. Even with new laws, they may take assets within a year.
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